Allied World Assurance Company Holdings, AG AWH announced that it has completed its previously announced acquisitions of Hong Kong and Singapore operations of Royal & Sun Alliance Insurance plc. (“RSA”)
Allied World had announced its intention to takeover the Hong Kong and Singapore operations in Aug, 2014. The closings follow receipt of all necessary regulatory and court approvals. Both operations underwrite a mix of commercial specialty and retail business.
The acquisitions will bring in a niche group of specialty lines, including casualty, construction and engineering, marine and property business and are likely to be immediately accretive to Allied World’s earnings.
The transaction, which is valued at $193 million, was funded by Allied World with cash in hand.
Post-acquisition the businesses are now a part of Allied World’s Global Markets Insurance segment. This newly formed segment is already operational in Europe and Asia Pacific, which includes offices in Australia, Hong Kong and Singapore.
Allied World chose Royal & Sun Alliance Insurance because of its long operating history in both the regions. While Royal & Sun Alliance Insurance has been present in Hong Kong for the past 40 years, its relation with Singapore is 180 years old. Last year, these units accounted for nearly $12.25 billion of gross premiums written.
Notably, Allied World’s solid liquidity with cash and cash equivalents of $589.3 million as of Dec 2014 (up 11% from 2013) and retained earnings of $3.8 billion (up 10.4%) cushion its expansion initiatives.
Currently, Allied World sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other stocks from the property and casualty insurance sector that warrant a look include Arch Capital Group Ltd. ACGL, First American Financial Corporation FAF and Fidelity National Financial, Inc. FNF. All of these stocks sport the same Zacks Rank as Allied World.
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