Posted on 14 Jul 2011
Selective Insurance Group Inc., based in Branchville, New Jersey, plans to enter the excess and surplus lines market by purchasing renewal rights to a $77 million book of commercial insurance business from Alterra Capital Holdings Ltd.
Selective Chairman, President and CEO Gregory E. Murphy says the company has been looking to expand into new areas. “As we execute on our strategy to introduce more products into our portfolio, we believe E&S is a natural extension of our current commercial-lines small business,” he explains. “Historically, the contract binding authority E&S business has been more profitable than the standard commercial-lines business, and this creates an opportunity to improve our revenue and underwriting margin.”
According to Hamilton, Bermuda-based Alterra, the transaction involves its U.S. E&S subsidiary, Alterra Excess & Surplus Insurance Co., and Selective subsidiary, Selective Insurance Co. of America. The business involved in the transaction is written under CBA by Alterra E&S's contracted general agents.
W. Marston (Marty) Becker, president and CEO of Alterra, says of the deal: “We are pleased to have reached an agreement with Selective. Although the CBA division produces a good book of business, we do not believe it is consistent with Alterra's long-term strategy. Our agreement with Selective recognizes the value of our CBA division and ensures its continued operations, which we considered of importance in negotiating the transaction.”
A spokesperson for Selective says both companies agreed not to release the terms of the transaction, which is expected to close August 1. Alterra says the CBA division, excluding the specialty personal-lines business that was not part of the transaction, produced aggregate gross premiums written of $77 million in 2010.