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RSA USA sale to Arrowpoint under review


DOVER, Del.--A Delaware Insurance Department hearing commissioner has recommended that Commissioner Matthew Denn approve the sale of Royal & SunAlliance USA Inc. to Charlotte, N.C.-based Arrowpoint Capital Corp., a vehicle established by RSA USA's management team.

After release of the 72-page proposed order by hearing officer Lawrence A. Hamermesh, Mr. Denn said last week that he intends to "begin a thorough review and to issue a timely decision."

Policyholders who have opposed the transaction have until this Friday to comment on the proposed order, Mr. Denn added in the statement that reacted to Mr. Hamermesh's recommendation.

Last September, Arrowpoint announced its agreement to acquire Royal Indemnity Co. and other members of RSA USA's insurance pool for $300 million from parent company Royal & Sun Alliance Insurance Group P.L.C. Under terms of the deal, the parent would contribute $287.5 million upon completion of the transaction.

Mr. Hamermesh's proposed order backing the sale followed a Jan. 19 hearing at which major policyholders, including Detroit-based General Motors Corp. and New York-based World Trade Center Properties L.L.C., objected and contended the deal would leave the U.S. operation with inadequate capital.

"It appears from a preponderance of evidence of record that the applicants do not have any plans to manage the insurers that would be unfair and unreasonable to policyholders and/or that would be contrary to the public interest," Mr. Hamermesh said in the proposed order.He also said that "whatever uncertainty may exist with respect to the insurers' ultimate ability to pay legitimate policyholder claims, the proposed transaction will only enhance that ability."