By law, the Division of Insurance had to conduct a public hearing on the purchase and sale before issuing its approval
On December 5, 2016, the Massachusetts Division of Insurance issued its decision regarding the General Indemnity Group, LLC (“GIG”)’s application earlier this year for the approval of its proposed acquisition of control of the United Casualty and Surety Insurance Company (“UC&S”).
The request for approval from the Division, which was announced in October of this year, is due to the fact that UC&S is a Massachusetts-domiciled insurer. As a result, pursuant to M.G.L. c. 175, §206B, the Division of Insurance is required to conduct a public hearing on the matter prior to determining whether or not to approve the proposed acquisition of control as well as to allow any persons who might be affected by the proposed acquisition the opportunity to give testimony or evidence on the matter.
According to public documents filed by GIG, on May 19, 2016, the General Indemnity Group, a subsidiary of the Boston Omaha Corporation, had entered into a Stock Purchase Agreement with the shareholders of the UC&S earlier this year. Once approved, GIG will acquire effective control of UC&S, via the purchase of all issued and outstanding stock of the property and casualty insurer.
The Division of Insurance’s Decision
The Division held a public hearing on the matter of the acquisition on November 15th, as announced in Bulletin F2016-01; Acquisition of Control of United Casualty Ins. Co. After the public hearing, it has now issued its official decision entitled “In the Matter of the Acquisition of Control of United Casualty and Surety Insurance Company by the General Indemnity Group, LLC.”
At the public hearing, Cara Toomey, Esq. represented the Division of Insurance, while Alan Packer, Esq. appeared on behalf of United Casualty. There were a total of three witnesses who testified during the hearing: Michael Scholl, ACAS, MAAA, president of GIG; Todd S. Carrigan, president of United Casualty; and Renu Wadhwa, a Finance Manager with the Division of Insurance.
After various deliberations regarding whether or not the acquisition satisfies various requirements of §206B, the Division’s hearing officer, Jean Farrington determined that the proposed acquisition complied with all of the various requirements pursuant to Massachusetts law and would not be prejudicial to either the policyholders or the insuring public. As such, the Commissioner officially authorized the acquisition.
For those interested in reading the full decision, an official copy is available here.
A family-owned property and casualty insurer based in Quincy
United Casualty and Surety Insurance Company is a Massachusetts domiciled stock property and casualty insurance company that was first organized on March 7, 1988 and incorporated on May 1, 1989 under the laws of the State of Georgia. An amendment approved by the Secretary of State of Georgia on April 17, 1989 approved the company’s request to change the company name (formerly United Casualty and Surety Company, Inc.) as well as to modify the types of insurance the Company was initially authorized to write.
On June 28, 1993, the Company re-domesticated to the Commonwealth of Massachusetts. Shortly thereafter, and pursuant to Massachusetts law, a merger of the two former entities, United Casualty and Surety Insurance Company and United Casualty and Surety Company, Inc. was certified with the former becoming the surviving corporation.
Now based in Quincy, UC&S is a family-owned insurer run by the Carrigan family with its principal lines of business being surety and fidelity bond coverages, with it primarily specializing in providing surety bonds. The company is rated A- (Excellent) by AM Best and is approved by the United States Department of the Treasury (570 Circular).
It is currently licensed to write business in the following states of Massachusetts, Rhode Island, New Hampshire, Maine, New York, New Jersey, Connecticut, Pennsylvania and Florida. Total Liabilities, Capital and Surplus for the insurer as of 2009, the last year the insurer was examined by the Division of Insurance, totaled $10,425,281.
According to documents filed with the SEC, General Indemnity Group, LLC has agreed to purchase the acquired stock of UC&S for $13,000,000 which will be paid to the selling stockholders at the closing.
More about the buyer, General Indemnity Group, LLC
Also based in Boston, the General Indemnity Group, LLC is the wholly-owned subsidiary of the Boston Ohama Corporation, whose headquarters are on Newbury Street. The company currently operates several lines of businesses, including outdoor billboards in addition to other related advertising services and a surety insurance brokerage firm. The Boston Omaha Corporation is run Co-CEOs Adam K. Peterson, who is based in Omaha, and Alex B. Rozek, who is based in Boston.
On September 11, 2015, the company formed General Indemnity Group, LLC, a wholly-owned subsidiary, for the purpose of acquiring and underwriting “potential future insurance operations.” In October of 2015, the company commenced its operations with the hiring of Michael Scholl, ACAS, MAAA as President. Ms. Scholl is a former actuary.
GIG says that it intends to employ “a hybrid distribution model, working both on a direct basis as well as through the traditional agency model.” According to Boston Omaha’s 2015 Annual Report, GIG is also on the hunt for acquisitions and is interested in acquiring retail agencies, insurers or managing general agencies which fit within their model.
Since June of 2015, the company also has acquired seven different outdoor billboard businesses located in various states including Alabama, Florida, Georgia and Wisconsin. As a result, it now owns and operates more than 520 billboard signs. In addition to these corporate endeavors, GIG also maintains minority ownership in several real estate ventures.
In April of this year, the company acquired the Warnock Agency, a surety-only agency providing surety bonds in all 50 states for a cash purchase price of $1,345,000.