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AJ Gallagher to Pay $388mn for
Canadian Broker Noraxis
Arthur J Gallagher (AJG) has announced a second major international
acquisition in little more than a month with an agreement to buy a majority
stake in Canadian broker Noraxis Capital Corporation for C$422m ($388m).
The transaction will see the expansive US-based firm take an 87% equity
holding in Noraxis, with the remaining 13% of shares remaining in the hands
of management at the broker. And AJG said the acquisition will be used as a
springboard for organic growth in Canada and as a focal point for bolt-on M&A
deals. The strategy is similar to that outlined last month by AJG as it agreed
to buy Wesfarmers’ insurance brokerage operations in Australia for A$1.01bn
($933mn), and to its approach in the US and UK as it looks to build out its
global platform. Noraxis is a top-five Canadian insurance broker operating in the Retail Commercial, Personal and Employee Benefits
markets. The firm generated almost C$125m in revenue last year and has more than 650 employees operating out of 23 offices across
the country. Noraxis is projected to generate C$138m of revenues in 2015, with EBITDAC of C$52m after synergies which are expected
to range between C$2m to C$3m per quarter through next year before integration costs. AJG added it will finance the transaction from
additional long-term borrowings and its line of credit, and said the deal is expected to be earnings accretive in 2015 to the tune of $0.07
per share. AJG Chairman, President and CEO J. Patrick Gallagher, Jr said: “By adding Canada to our recent expansion in Australia,
New Zealand and the UK, we are now well positioned in those countries to replicate our successful acquisition strategy of partnering with
smaller, family-owned, and entrepreneurial agents and brokers.”
Argo Hires Aviva CUO Schmidt
Argo Group has hired Axel Schmidt from UK insurer Aviva to take over as Group Chief Underwriting Officer (CUO) when the role is
vacated by departing reinsurance executive Andrew Carrier. At Aviva, the UK’s largest non-Life insurer, Schmidt has been CUO for UK
General Insurance since 2009. Prior to joining Aviva, Schmidt was Technical Underwriting Director in Zurich’s Global Corporate division.
It is believed he will serve his notice at Aviva and take up his new role in the autumn. Unveiling the senior appointment, Argo Group CEO
Mark Watson III explained the rationale behind hiring Schmidt: “In addition to having large account specialty expertise, his tenure at Aviva
also exposed him to small account business. If you look at our company, we tend to be focused on very small accounts or very large
accounts – so his experience is a really good fit with us. He also has great experience in the territories where we operate, which suits
our company really well.” Sources expect Schmidt to look to build on the international platform that Carrier has effectively stabilised since
joining the Bermuda-domiciled group in 2007. It was reported earlier in the month that Carrier had resigned from Argo after fulfilling the
then newly constituted group CUO role since January 2011. Carrier was first hired by Argo to lead the formation of Bermuda-based Argo
Re. He remained President of that business until December last year, when he handed the role on to Matthew Wilken. Between 2009 and
2012 Carrier was also director of underwriting at Argo Syndicate 1200. The whole of Carrier’s career before Argo was spent at Lloyd’s
(re)insurer Kiln, which he joined in 1984 after leaving university. He became a Director of the firm’s managing agency in 1995 and was
appointed Active Underwriter of Syndicates 510 and 557 in 2000.
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Select Aspen Underwriters Gain
Retention Bonuses
A select band of senior Aspen underwriters are reportedly to benefit from retention bonuses
as the firm shores up its defences against the hostile attentions of rival bidder Endurance.
Back at Aspen’s Q1 analyst call on 24 April, CEO Chris O’Kane said that the reinsurer had
not had to make such payments to date but neither did he rule them out: “I think that risk is
actually very low. That said, things come up and current circumstances can be destabilising
for a company and less well-aligned employees. We will take a look on a case-by-case
basis, but we haven’t had to do anything of that nature so far.” On the call O’ Kane also contrasted the relative job satisfaction of the
autonomy, trust and freedom granted to key Aspen professionals with that of a “command and control” environment. “They fundamentally
want to work here,” he said. However, it is believed that since then monetary incentives have been offered to dissuade waverers, in the
face of unrelenting pressure from the Endurance camp. An Aspen spokesman said: “We don’t comment on individual compensation
arrangements.” The news of the defensive move is as much an indication of the highly competitive market for underwriting talent as it is of
the seriousness with which Aspen management is taking the hostile John Charman-led approach for the firm.
Cook to Hand Over Atrium CEO Role to Harries
Steve Cook is to stand down as CEO of top-quartile Lloyd’s business Atrium seven months after it was acquired by diversifying legacy
company Enstar, it has been reported. He will be replaced by Richard Harries, currently Active Underwriter of Atrium Syndicate 609,
when he steps down on 1 July. Sources said that Cook had long been planning to give up the CEO role, and that the move broadly
coincides with his 50th birthday. Cook, also Managing Director of Atrium’s managing agency, will become Deputy Chairman of both the
group and the agency, working around three days a week. Harries will continue as Active Underwriter of Syndicate 609, making him one of
only a handful of remaining CEO-active underwriters in the Lloyd’s market alongside MAP’s Richard Trubshaw. Cook’s role as Managing
Director of Atrium Underwriters Ltd will be taken over by James Lee, currently Chief Operating Officer. In further changes, Brendan
Merriman will become Group CFO, while Kirsty Steward, previously Acting Finance Director for the managing agency, will take the
position on a permanent basis on her return from maternity leave. The changes complete a root and branch overhaul of Atrium’s senior
management team over the past 15 months. The turnover began with the departure of Group Finance Director Andrew Baddeley, who left
to join Brit. Former group CEO Nick Marsh resigned in turn at the end of last year, having served as Director of Underwriting Review in
the final stages of his 40-year career at Atrium.
Atrium Hires Canopius Head of Marine
Treaty
Enstar-owned Lloyd’s business Atrium has hired Andrew Hedges from Canopius. Hedges
was previously Head of Marine Treaty at Canopius, and will work under Deputy Underwriter
Toby Drysdale, who oversees Marine and Property Treaty at Atrium. Canopius writes an
excess-of-loss account of Lloyd’s syndicates and company market businesses. It also writes
a “foreign” excess-of-loss portfolio. Hedges also wrote a space pro rata book for the top-10
Lloyd’s carrier. Top-quartile Lloyd’s carrier Atrium is a relatively small writer of reinsurance business. Atrium Syndicate 609 wrote £380mn
($637mn) of gross premiums in calendar year 2013. However only £29.5mn of this came in reinsurance lines, down from £32.6mn the year
before. Its marine, aviation and transportation insurance book had gross written premiums of £121mn.
Canopius Restructures Energy and Marine Insurance
Canopius Group has separated its existing Marine & Energy Insurance unit into two separate divisions. The global specialty (re)insurer said
splitting the unit is designed to maximise the growth opportunities available to Canopius, following its acquisition by NKSJ Holdings subsidiary
Sompo Japan Insurance. The Marine division will continue under the leadership of Joyce Webb, with a focus on developing Canopius’ Marine
Liability, Cargo, Specie and Hull lines of business. The Energy division will be led by Steve Warren, who has been promoted to Divisional
Underwriter. Both Webb and Warren will report directly to Global Specialty CEO Stephen Gargrave, who said: “The combination of Canopius’
expertise in specialty lines underwriting and NKSJ’s financial strength and additional geographic reach presents us with tremendous potential for
growth.” Gargrave added that the Energy sector in particular has been identified as having significant scope for expansion, from hubs in the US,
Middle East, Asia and Latin America. The changes are unconnected to the departure of Head of Marine Reinsurance Andrew Hedges.
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Paxton Joins CFC to Run Cyber,
Technology and Media
Specialist lines underwriting agency CFC has hired Victoria Paxton from Beazley as the
Practice Leader for Cyber, Technology and Media. A well-known and highly respected figure
in the London market, Paxton is a renowned specialist in cyber with over 15 years’ experience
in this class of business most recently as Beazley’s Senior Underwriter for Cyber focusing on
US Healthcare. Previous to Beazley, she held roles at both Willis and Aon, and in 2012, was
shortlisted for the Young Underwriter Meteor of the Year Award at the Insurance Insider Honours.
CFC Underwriting Director Andrew Holmes said: “We are delighted to welcome Vicky on board.
Her appointment is part of a major investment we’re making in cyber and being able to attract
one of the top underwriters from the current market leader is a real coup for us. I believe her
appointment shows our commitment to bring on board leading industry professionals to drive constant expansion and innovation in existing
lines of business as well as new areas at CFC.”
Endurance Chief Operating Officer Departs
Endurance Chief Operating Officer Catherine Kalaydjian has left the Bermudan carrier after more than a decade. It is understood that
Kalaydjian’s role has been made redundant as CEO John Charman continues to streamline an organisation that he judged to be overexpensed on his arrival a year ago. Kalaydjian joined Endurance in 2003 as a Senior Vice President and Head of Claims for the US
reinsurance operations. She became Chief Claims Officer in March 2007 and was promoted in December 2012 to Chief Administrative
Officer. In July 2013 she was appointed to the position of Chief Operating Officer. Sources said Endurance will not be recruiting a
replacement for Kalaydjian as it looks to redeploy costs from back office towards front-line underwriting. Charman eliminated 30% of
senior positions at Endurance after his arrival, with departures including Kalaydjian’s predecessor as COO, Global Head of HR Kurt Elia,
Chief Risk Officer Nick Campbell and Michael Warwicker, who was Head of Insurance for Bermuda.
China Expert Joins Lloyd’s Council
Former Goldman Sachs Partner and China expert Fred Hu has joined the Lloyd’s
Council at the same time as two new appointments to the Franchise Board were
announced. Hu, currently Chairman of China-based investment firm Primavera
Capital, worked at Goldman Sachs between 1997 and 2010, including a stint as
the bank’s Chairman of Greater China. An economist by training, Hu takes up his
seat on the Lloyd’s governing council with immediate effect. Lloyd’s also said its
Chief Counsel, Sean McGovern, and Joy Griffiths, Chairman for the Asia Pacific
region at credit-checking firm Experian, would join the Franchise Board. The
Lloyd’s Council is the supreme decision-making body at No 1 Lime Street, but the
Franchise Board is responsible for the day-to-day management of the Corporation.
McGovern has been with Lloyd’s since 1996, taking over as the market’s most senior in-house lawyer in 2002. He is also responsible for
risk management at Lloyd’s. Lloyd’s has set itself a target of doing proportionally more business in the fast-growing emerging markets of
Asia and Latin America under its “Vision 2025” long-term strategic plan, unveiled in 2012.
Talbot US Adds Marine & Energy Specialists from Tower
Talbot Underwriting has added to its US platform with the hiring of Tom Guarnera as Vice President of Marine and Energy underwriting.
The Validus Lloyd’s platform said Guarnera will be based in its New York office reporting to Talbot Underwriting Services (US) Ltd’s
CEO David Hawksby. Guarnera was most recently at US insurer Tower Group, where he was Division Senior Vice President for Marine
& Energy. The executive was previously Managing Director at Flagstone’s Mosaic Underwriting Services business and, prior to that, at
Mutual Marine Office. He is joined at Talbot by another former Tower colleague, Christian Platusich, who takes the post of Underwriter
for Marine & Energy.
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Enstar Takes Direct
Control of Torus After
O’Donohoe Departure
Enstar Group Ltd has moved to take a tighter hold
of recently acquired subsidiary Torus with a round of
management changes, as it looks to turn around the
business and get its entry into the live market back on
track. The centrepiece of the shake-up is the replacement
of respected Group Chairman and CEO Dermot
O’Donohoe with Enstar co-founder and Joint Chief
Operating Officer Nick Packer – who will be Torus’s
third CEO in just 10 months. The decision to parachute
Packer in as CEO represents at best Plan B for Enstar.
Group Chairman and CEO Clive Tobin left Enstar as
soon as its $692m sale to Enstar and Stone Point was
agreed in July last year, with International CEO O’Donohoe promoted to the top job. However, at least from an early stage, O’Donohoe was seen
as a stop-gap solution by Enstar and by November last year former Alterra executive Adam Mullan had been brought in to work for acquisition
vehicle Bayshore – ostensibly to work on the integration. It very quickly became apparent – allegedly not least because of Mullan’s decision to
talk fairly openly with Torus staff – that the XL alumnus was to become Group CEO after the deal closed, placing O’Donohoe in a near impossible
position. But the succession plan was never put into effect as the closure of the deal faced a series of delays and Enstar responded lukewarmly
to Mullan’s work on the integration plan. Mullan left in March and Enstar then held talks with O’Donohoe about a deal that would keep him in
place as Chairman and CEO. The collapse of talks on a new contract led to O’Donohoe’s departure last week and Enstar’s decision to activate a
contingency plan. The decision to get a firmer grip on Torus by appointing Packer, one of the three most senior staff at Enstar, along with another
senior Enstar employee, Gareth Nokes, as CFO, follows a sequence of setbacks. Sources said that Packer’s focus at Torus will be on knocking
the business into shape and getting control of its expense base. For the last 20 years Packer has been one of the key operators at Enstar, which
has outperformed its legacy peers, but he does have some background in the live market, having worked as deputy underwriter at CH Bohling.
However, Enstar will be relying on other members of Torus’s senior management for more extensive live market experience. Chief among these
will be Demian Smith, previously Head of Marine at Torus, who will become CEO of the international business, as well as Head of Upstream
Energy David Message, who is set to become CUO for International. Alongside these well-regarded underwriters, Enstar will lean on Stone Point
Partner and experienced executive John Shettle, who is running the troubled Americas business on an interim basis.
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