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CHICAGO--Aon Corp. has agreed to sell its managing general underwriting unit Construction Program Group to Old Republic Insurance Co. for $85 million in cash.
The move, announced Wednesday, is the latest in the Chicago-based brokerage's plans to exit much of its underwriting business.
Aon agreed in June to sell its Aon Warranty Group and Virginia Surety Co. Inc. units to Toronto-based investment firm Onex Corp. for $710 million (BI, July 3).
As part of the CPG transaction, Aon will transfer approximately $300 million of unearned premium and claim reserves on the books of Virginia Surety that relate to business previously written through CPG, Aon said in a statement.
The sale of CPG and the previously announced sale of Aon Warranty and Virginia Surety are expected to be completed in the fourth quarter, Aon said. Aon continues to operate Combined Insurance Co. of America, its accident, life and health insurance unit.
In a related move, Aon said it will strengthen the reserves of its remaining specialty property/casualty business, which it placed in runoff earlier this year, by about $100 million.
A majority of the reserve strengthening relates to National Program Services, a defunct Hanover, N.J.-based independent managing general underwriter, which wrote habitational risks on behalf of Virginia Surety, Aon said.
NPS Principal Vito Gruppuso pleaded guilty in 2004 to state charges that he pocketed more than $78.8 million in client property premiums intended for several insurers, including Virginia Surety.
Virginia Surety sued NPS for fraud after terminating the program in 2002 and has continued to report losses on the runoff of NPS business (BI, June 7, 2004).