The acquisition is valued at $450 million in cash, and was recently announced following an agreement between the parties involved. The transaction is also expected to close in Q3 or Q4 of 2024.
Under the terms of the deal, Allianz Global Corporate & Specialty, the carrier for large corporate and specialty insurance within Allianz Group, will transfer the aforementioned businesses, previously underwritten by its Fireman’s Fund subsidiaries, to Arch Insurance North America.
The transaction entails Arch assuming approximately $2 billion of loss reserves associated with the acquired businesses, highlighting the recognised franchise value of the assets being acquired.
The businesses being divested, underwritten by Fireman’s Fund Insurance Company and its subsidiaries, collectively generated $1.7 billion in gross premium written during 2023, indicating their significant market presence and potential for growth under new ownership.
The agreement also addresses the transition of human resources, with approximately 500 Allianz employees expected to join Arch as part of the acquisition, ensuring a smooth transfer of expertise and operational continuity.
Following the completion of the transaction, Allianz Global Corporate & Specialty’s US operations will focus on strengthening its position in the large corporate and specialty insurance segments. This strategic realignment underscores Allianz’s commitment to providing tailored solutions to its clients, leveraging its global expertise and industry-specific capabilities across underwriting, claims, and risk consulting.
The acquisition is anticipated to have a notable impact on the insurance market landscape, as Arch Insurance North America expands its portfolio and market presence, while Allianz Global Corporate & Specialty refines its strategic direction to better serve its clients. As the transaction progresses, industry stakeholders eagerly anticipate further developments in this dynamic sector.
Tracy Ryan, AGCS Chief Executive Officer for North America and member of AGCS’s Board of Management, said: “This strategic step for our U.S. business allows us to leverage our strengths in these important market segments, where we have deep expertise in addressing our clients’ most complex risks. We are proud of our employees who have served our U.S. MidCorp and Entertainment clients and brokers over the years. We are confident that they will be a strong addition to Arch, ensuring continuity for our partners.”
Matt Shulman, CEO for Arch Insurance North America also commented, saying: “The acquisition of the MidCorp business meaningfully expands our presence in the U.S. middle market, a targeted growth area for Arch. This transaction will enhance our distribution relationships, broaden our product suite and expand our ability to participate in these underwriting-intensive middle-market lines.”
He added: “We are also excited to add a market-leading Entertainment business that complements Arch Insurance’s existing portfolio of specialty products.”
