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Allied Specialty Insurance Company Acquired by Global Giant

9/8/2015

By Timothy Herrick

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About a year after some of its senior sales staff left for an upstart insurance provider, one of the oldest and largest insurance companies servicing the fair and amusement industry is again making news.  X.L. America - the U.S. indirect wholly-owned subsidiary of global insurance giant, XL Group - is acquiring Allied International Holdings, Inc., the holding company of Allied Specialty Insurance, Inc. and T.H.E. Insurance Company, a leading insurer of the outdoor entertainment industry in the U.S.

"This acquisition of a leader in a niche specialty risk business with deep, long-standing client relationships and strong customer loyalty is perfectly aligned with the complex underwriting expertise of XL Catlin," commented Mike McGavick, CEO of XL.  "Now as part of the XL Catlin team, together, we look forward to new opportunities to further grow the business and build upon Allied's exceptional customer service and solid underwriting performance."

Allied Specialty Insurance is the leading provider of property and casualty insurance coverage for the amusement and entertainment industry through its specialty insurance company, T.H.E. Insurance Company, its specialty insurance agency, Allied Specialty Insurance, Inc. and its independent brokerage channel. The Company's 3,000 clients include carnivals, concessionaires, amusement parks, waterparks, fairs and festivals, firework events and family entertainment centers.

T.H.E. Insurance Company, a privately held company, founded in 1983, had approximately $70 million of gross written premium in 2014.  It provides insurance to clients in the amusement and entertainment industry, including carnivals, fairs, festivals, hot air balloons, fireworks, concessionaires, family entertainment centers and waterparks.  The transaction is expected to close no later than the first quarter of 2016, pending receipt of anti-trust and regulatory approvals and the satisfaction of customary closing conditions.

"After decades spent building our brand and deep knowledge of our clients' needs, we're proud of our track record and incredibly excited to be taking this step towards new growth and opportunities with XL Catlin," said Mary Chris Smith, Chairman and President of Allied Specialty Insurance, Inc.  "In XL Catlin we have found our partner for long-term success and resources to help us innovate for our clients' evolving needs in this growing entertainment space."

Allied Specialty Insurance will retain their offices in Treasure Island, FL, with no immediate changes to the existing management team - who will continue running the day to day operations - expected. "Clients wanted assurance that the same people will continue to service their accounts," said Smith.  "We have assured them of this and the news has been very well received."

The monetary value of the acquisition was not made public. Allied Specialty Insurance was seeking a buyer, according to Smith. "We chose XL Catlin because of its proven track record of excellence in meeting its clients' complex risk management needs,"  she said. "Over the years, Allied has received inquiries from a number of interested buyers.  The timing was right to explore a potential transaction with XL Catlin."

In addition, the deeper pockets will enable Allied Specialty Insurance to reach new markets. "XL Catlin provides us a much broader operating base," said Smith.   "Our clients and their industry have been growing and expanding. Allied wants to ensure that we maintain the capability to fully service them for years to come.  Now is the time for us to take Allied and our clients to the next level." Smith declined to elaborate on what that next level would be.

Smith stated that at this point, it is "unknown" if XL Catlin has any fair or clients similar to those in the Allied Specialty portfolio. She sees the synergies between the two companies being not so much in terms of sales or potential markets, but more in-depth underwriting experience, making an effective fit with the outdoor event experience Allied Specialty Insurance has gained. "XL Catlin understands the importance of Allied's deep "roots" within and understanding of the amusement industry," said Smith. "Allied's industry knowledge has been instrumental to its innate ability to provide insurance services to amusement clients.  At the same time, Allied recognizes that XL Catlin's unparalleled underwriting expertise and resources are key to the future of Allied and its long-time clients."

In addition, the acquisition immediately brings deeper pockets to Allied Specialty, with great potential for a  positive impact on the company and its clients. "With the financial backing and operational support of XL Catlin, Allied will be able to offer its valued clients many more options, and also will be able to provide services to new clients," said Smith. "The major benefit to our clients is that Allied and T.H.E. will now have the significant financial and operational backing of one of the world's largest and most sophisticated global insurance companies. This will allow us to better meet the growing needs of our current and future clients. We could not be happier with the advantages this will bring to our clients."

She added, "our fair industry clients are gaining the backing of one of the largest and most stable global insurance companies. We will be part of XL Catlin, so the company will interact with and support the fair industry through us. XL Catlin expects us to continue to manage and grow this business for them."

XL Catlin (previously known as XL Group) is a global insurance company headquartered in Ireland with executive offices in Hamilton, Bermuda and Stamford, Connecticut. In January,  2015, XL Group Plc announced the acquisition of Catlin Group.  According to Wikipedia: "XL Group Plc through its subsidiaries and under the XL Catlin brand, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world."

In February of 2014 - in one of the most dramatic staff "lifts" in the fair insurance market, nearly the entire executive sales staff of Allied Specialty Insurance was hired by Bretton Gallagher, a relative newcomer to the outdoor event segment of the insurance industry. This personnel migration was led by Rick D'Aprile, the former president of Allied, who took with him more than half a dozen senior sales executives, all well known insurance sales people in fair industry circles. Smith was named President of the company immediately following D'Aprile's departure.

Smith said that the acquisition of her company was not related to the events of last year. "This transaction has nothing to do with the departure of several salespeople from Allied in early 2014." 

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