Guardian Royal Exchange Splitting, Sold
Liberty Mutual Group says it has signed a definitive agreement to acquire the U.S. operations of Guardian Royal Exchange PLC (UK). The purchase price for GRE's U.S. operations in the transaction is reported to be near US$1.5 billion. The acquisition is subject to regulatory approval, and is expected to be complete by the end of the second quarter of 1999.
The deal also is conditioned on and concurrent with the completion of AXA Group's proposed acquisition of GRE PLC (UK). AXA Group's transaction is being made through Sun Life & Provincial PLC, its UK subsidiary, at a reported price of some US$5.7 billion.
GRE (UK) subsidiaries included in the Liberty Mutual purchase include Peerless Insurance Co., Keene, NH; Indiana Insurance Co., Indianapolis, IN; Midwestern Indemnity Co., Loveland, OH; Tower Insurance Co., Pewaukee, WI; Atlas Assurance Co. of America, New York, NY; American Ambassador Casualty Co., Schaumburg, IL; Globe American Casualty Co., Loveland, OH; and Albany Insurance Co., New York, NY.
Liberty Mutual says it plans to have each company maintain its identity. They will continue under the direction of the current senior management team, which is led by Chief Executive Officer Victor Yerrill and President and Chief Operating Officer Roger Jean.
Liberty Mutual President and Chief Executive Officer Edmund F. Kelly said, "We are very pleased to have GRE's U.S. operations join the Liberty Mutual Group. Its regionally focused companies possess a well deserved reputation for high quality service, knowledge of their local marketplaces, and a strong agent and broker distribution system. Those attributes, combined with GRE's exceptional management team, position it well for continued success.
"As part of the Liberty Mutual Group, GRE's management and employees will have the autonomy, responsibility and support to enlarge and strengthen their franchises in their chosen markets," Kelly added.
"Clearly this is a positive for our companies and employees," said GRE's Victor Yerrill. "Roger Jean and I are committed to providing our agency and policyholder customers with the very best service and products possible. With the support of the Liberty Mutual Group, we will be able to accomplish this."
The GRE U.S. operations will become part of Liberty Mutual's Commercial Insurance Holdings unit. Liberty Mutual's Commercial Insurance Holdings unit includes regional property and casualty companies that distribute their small commercial and personal lines products and services through independent agents and brokers. Current companies are Golden Eagle Insurance Corp., San Diego, CA; Montgomery Mutual Insurance Co., Sandy Spring, MD; Merchants & Business Men's Mutual Insurance Co., Harrisburg, PA; Summit Holdings Southeast, Lakeland, FL; and Colorado Casualty Insurance Co., Englewood, CO.
AXA says it is making the acquisition because it "fits with AXA's strategy to be a leader on its markets and enables us to strongly develop insurance activities in the UK, Ireland and Germany."
Specifically, AXA says, the proposed deal provides:
- critical mass to its UK property and casualty business, which would move from tenth largest to third largest
- a significant strengthening in its UK direct portfolio, again moving to number three, with 2.5 million customers
- strengthening of its position in UK health care and life markets
- immediate leadership in Ireland, as the largest P&C insurer there
- a number two position in the German P&C market and
- a significant increase in asset management.