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LONDON-E.W. Blanch Holdings Inc. is buying 70% of Swire Fraser (Insurance) Holdings Ltd. from Swire Pacific Ltd. and Swire Fraser directors for an undisclosed amount.
Hong Kong-based Swire Pacific will retain a 30% stake in the broker.
Last week's deal follows Swire Pacific's sale of its underwriting operations to Royal & Sun Alliance Insurance Group P.L.C. and Zurich Insurance Group (BI, Jan. 27).
Swire Fraser and E.W. Blanch have been equal partners for more than two years in international reinsurance broker Swire Blanch Holdings Ltd. As part of the new deal, E.W. Blanch also is upping its stake in the joint venture to 70% and will merge Swire Fraser into Swire Blanch.
The purchase is likely to make E.W. Blanch the third-largest U.S. based reinsurance broker, behind Guy Carpenter & Co. Inc. and the combined operations of Alexander Reinsurance Intermediaries Inc. and Aon Re Worldwide Inc.
E.W. Blanch's gross revenues for 1996 were $110 million, while Swire Fraser revenues hit $33 million.
Executives denied the deal was a reaction to recent merger and acquisition activity in the broking sector. "This is a strategic deal between two close partners," and a natural development from the joint venture, said Gary Bearman, chairman and chief executive officer of Swire Blanch.
The motivation for the deal was greater access to the London insurance market, said Cory Moulton, president and chief operating officer of Swire Blanch. Also, there are "complementary skills" in Swire Fraser, such as specialty business and marine reinsurance "which are just not in E.W. Blanch in the U.S.," he added.
Swire Blanch will give E.W. Blanch significant income from outside of the United States, said Ted Blanch Jr., chairman and CEO of E.W. Blanch.
Uppermost on the agenda will be "efforts to closely integrate the U.S. and worldwide operations," said Mr. Moulton. Swire Fraser is strongly represented in Asia-Pacific and Europe, and Mr. Moulton said both of these areas will be strengthened, as well as Latin America-based business. "We are expecting significant growth," he said, which could entail additional acquisitions by E.W. Blanch.