Last week, property and casualty insurer Tower Group Inc. (TWGP) announced that it has completed its fifth acquisition in a span of one and a half years. The latest acquisition was the Personal Insurance business of OneBeacon Insurance Group.
The transaction, which was originally announced during February 2010, will cost Tower $167 million.
One Beacon’s Personal Lines Division provides private passenger automobile insurance, and also writes and manages homeowners and personal package business in the northeastern United States.
OneBeacon Insurance Group Ltd’s personal lines business will combine with Tower’s and create a separate business segment within the group. The combined business segment is expected to write $700 million of annualized premiums by broadening Tower’s mix of product lines and distribution channels in 2010 and beyond.
The acquisition is also expected to give access to more than 900 retail agencies in the Northeast, approximately 550 of which are new to the company. Also, it is expected to expand Tower’s suite of personal lines insurance products to include private passenger automobile, homeowner, umbrella and a personal package product which provides customers with a single policy for all of their homeowners, auto and umbrella needs.
Given the present competitive market and challenging economic climate, Tower perceives limited organic growth opportunities. The company has a proven track record of successfully acquiring and integrating insurance companies to expand its business platform.
Thus an integral part of Tower Group’s future growth strategy includes seeking out new complementary business opportunities by way of mergers and acquisitions either through renewal rights transactions or company acquisitions. In sync with this during 2009, Tower Group completed the acquisition of CastlePoint, Hermitage and Specialty Underwriters’ Alliance.
The CastlePoint and Specialty acquisitions expand Tower’s offering into specialty classes of business written by program underwriting agents throughout the country that it has not historically written. The Hermitage acquisition will enable Tower to expand its wholesale distribution system throughout the country as well as establish its retail distribution system in the Southeast. Tower also acquired the renewal rights to workers’ compensation business of AequiCap Program Administrators, positioning it to further expand its presence in the Southeast region.
Tower’s acquisition strategy over the past one and a half years reflects that it has been taking advantage of favorable market for acquisitions created by the challenging economic environment. Together these transactions have increased its scale, broadened its reach and expanded capabilities thus firmly positioning the company for continued success.
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