Key Takeaways
- Arch Capital Group said its Arch Insurance North America division was buying two insurance businesses written by Fireman’s Fund Insurance from German insurer Allianz for $450 million.
- The agreement gives Arch Capital Group Allianz’s MidCorp and Entertainment insurance units.
- The company noted that current employees of the two businesses will be joining Arch Insurance.
Shares of Arch Capital Group (ACGL) hit an all-time high Friday after the insurer said its North American unit was purchasing insurance businesses written by Fireman’s Fund Insurance from Germany’s Allianz for $450 million in cash.
Arch Capital said the deal would give it Allianz’s U.S. MidCorp and Entertainment insurance businesses, both of which it estimates will cost $1.4 billion in capital to support.
Arch said the two businesses it is acquiring had a combined total of $1.7 billion in gross premiums written last year. It said that approximately 500 employees from both will join Arch Insurance.
Arch Insurance North America Chief Executive Officer (CEO) Matt Shulman said that the acquisition of the MidCorp business “meaningfully expands our presence in the U.S. middle market,” which is an area the firm has been targeting. He said that the entertainment business “complements Arch Insurance’s existing portfolio of specialty products.”
Arch Capital expects the transaction to be completed in the second half of this year, subject to regulatory approvals.
Arch Capital shares were up 4.2% to a record $94.91 as of about 12:45 p.m. ET Friday and are 25% higher this year.