OneBeacon Insurance Group, Ltd. (OB) recently completed the sale of its runoff business to Trebuchet US Holdings, Inc. ("Trebuchet"), a wholly owned subsidiary of Armour Group Holdings Limited (“Armour”). The deal was initially announced in Oct 2012, and was pending regulatory approval. The scheduled time for the culmination of the transaction was the fourth quarter of 2014.
As per the divestiture agreement, the legal entities containing assets, liabilities and capital supporting the runoff business, along with some other infrastructure associated with the same was transferred to Trebuchet. However, the loss on sale of the business is projected at around $80.5 million.
The runoff business of OneBeacon comprised the remaining non-specialty commercial business lines along with some other runoff businesses, vast majority of the asbestos and environmental reserves, and some purchase accounting adjustments related to the runoff business and the OneBeacon acquisition.
OneBeacon is focused on enhancing its core operations and frequently engages in profitable investments. The company has resorted to divestitures as one of the strategies. Previously, in Jan 2013, OneBeacon closed the sale of a direct wholly-owned subsidiary, Essentia Insurance Company (Essentia), to Markel Corp. (MKL). Being a collector car and boat insurer (non-core operations), Essentia’s disposition helped OneBeacon focus on its core business, also translating into a pre-tax gain of $23 million on sale in the first quarter of 2013.
OneBeacon currently carries a Zacks Rank #4 (Sell). However, better-ranked stocks in the property and casualty insurance space that look attractive at current levels include Navigators Group Inc. (NAVG) and Arch Capital Group Ltd. (ACGL). While Navigators sports a Zacks Rank #1 (Strong Buy), Arch Capital has a Zacks Rank #2 (Buy).
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