Allianz to sell Fireman’s Fund business to Arch
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German insurer Allianz Global Corporate & Specialty SE has agreed to sell its U.S. mid-market and entertainment insurance business underwritten through Fireman’s Fund to an Arch Capital Group Ltd. unit for $450 million.
As part of the transaction, Arch Insurance North America will assume about $2 billion in loss reserves associated with the business, the Allianz SE unit said in a statement. The business sold to Arch totaled about $1.7 billion in gross premium in 2023.
“The cash payment from Arch, together with an estimated $1.0 billion of Allianz capital supporting the business, is expected to result in $1.4 billion of total transaction value for Allianz Group,” the statement said.
About 500 AGCS staff are expected to join Arch.
Going forward, AGCS’ U.S. focus will be on large commercial and specialty business, the insurer said.
“The acquisition of the midcorp business meaningfully expands our presence in the U.S. middle market, a targeted growth area for Arch,” said Matt Shulman, CEO of Arch Insurance North America, in a separate statement.
The deal is expected to close in the second half of this year.
Allianz bought Petaluma, California-based Fireman’s Fund in 1991 for about $3.3 billion.
Over the past 30 years, it has restructured the operations, including in 2014 absorbing some of it commercial business into AGCS units and in 2015 selling its personal lines business for wealthy individuals to a predecessor of Chubb Ltd. for $365 million. In 2016, Allianz transferred about $2.2 billion of Fireman’s Fund business to a runoff insurer.
The sale to Arch includes most of the active business of Fireman’s Fund, an Allianz spokesman said in an email.
“A later stage in the transaction could include a legal entity purchase of the Fireman’s Fund companies, contingent on the completion of a legal separation from Allianz,” he said.
Bermuda-based Arch's share price rose about 3% in morning trading on Friday.
