Liberty Mutual Completes Ironshore Acquisition; Will Use Ironshore Brand for U.S. Specialty Business

May 3, 2017 - Liberty Mutual Insurance has completed its acquisition of specialty insurer Ironshore Inc., creating a global specialty business with approximately $6.5 billion in net written premium.

Liberty Mutual announced last December it would acquire a 100 percent ownership interest in Ironshore for approximately $3 billion, or 1.45 times Ironshore’s tangible book value at year-end 2016.

Liberty Mutual said it is combining its existing Liberty International Underwriters U.S. business and Ironshore’s U.S. specialty lines business under the Ironshore brand, which it said will create the sixth largest writer of excess and surplus lines in the U.S. based on 2016 direct written premium.

“The combination of our two operations will create a top tier U.S. specialty insurer with a broad and deep set of solutions for clients and brokers,” said David H. Long, Liberty Mutual Insurance chairman and CEO.  “For Liberty’s worldwide operations, Ironshore becomes an ideal complement to our $5 billion global specialty business by providing additional scale, expertise, innovation and market relationships.”

Kevin H. Kelley, current Ironshore chief executive officer, will continue to lead all Ironshore operations and report directly to Long.

Ironshore’s existing international businesses, including its Lloyd’s syndicate operation (Pembroke) and Bermuda platform, will continue to operate with its existing management team, business strategy and Ironshore brand.  Mitch Blaser, Ironshore COO, CEO Ironshore Bermuda and CEO IronServe, and Mark Wheeler, CEO Ironshore International, will continue to report directly to Kelley.

The combined U.S. specialty organization will be led by Shaun Kelly, Ironshore president and CEO Ironshore U.S., who will report directly to Kelley.  The combined U.S. specialty operation comprises the following product leadership teams:
•John O’Brien, head of Environmental
•Matthew Dolan, head of IronHealth
•Michael Finnegan, head of U.S. Casualty
•Greg Flood, head of IronPro
•Edward Mazman, head of U.S. Property
•Daniel Sussman, head of U.S. Political Risk

Joseph Boren will be the head of U.S. Distribution, reporting directly to Shaun Kelly. Jessica Rogin will be Ironshore’s U.S. chief claims officer, reporting directly to Mike Mitrovic, Ironshore’s global chief claims officer. Randall Kneeland will be Ironshore’s chief financial officer, reporting directly to Kevin Kelley.

“Ironshore’s profitable specialty lines business will further bolster Liberty Mutual’s specialty markets platform, while Liberty Mutual’s strong balance sheet presents Ironshore opportunities to innovate additional product lines and to access greater insurance underwriting capacity,” said Ironshore CEO Kelley.

The company said there will be no changes to the existing Liberty Mutual Global Specialty business outside of LIU U.S.  Liberty Specialty Markets (including Liberty’s Lloyd’s syndicate), LIU Canada, LIU Asia Pacific, LIU Latin America and the Global Surety operation will all continue to be run by Christopher Peirce, president of Global Specialty, with no changes to the existing management team, brand or business strategy.  Peirce will continue to report directly to Liberty CEO Long.

Ironshore had gross premiums written of $2.2 billion in 2016 and prior to this combination was the ninth largest excess and surplus lines insurer in the U.S. based on 2016 direct written premium.  The company, which has approximately 800 employees located in 15 countries, is organized into three major operating hubs based in the United States, Bermuda and London.

The company said clients and brokers should continue to communicate with their existing contacts at Liberty Mutual and Ironshore.

A.M. Best Rating

Rating agency A.M. Best said it has removed from under review with developing implications and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Ironshore Insurance Ltd. (Bermuda) and its affiliated operating companies: Ironshore Indemnity Inc. (Minneapolis), Ironshore Specialty Insurance Co. (Scottsdale) and Ironshore Europe Designated Activity Co. (Ireland).

Concurrently, A.M. Best said it has also removed from under review with developing implications and affirmed the Long-Term ICR of “bbb” of Ironshore Inc. (Cayman Islands).

The outlook assigned to these Credit Ratings (ratings) is stable.

A.M. Best said the ratings reflect the company’s “enhanced business profile” under the ownership of the Liberty Mutual, which maintains “strong brand recognition and a dominant market profile.”  A.M. Best said the deal should solidify Ironshore’s position as a leader in the specialty insurance market.

A.M. Best said it expects Ironshore’s senior management and core book of business to benefit Liberty Mutual as it builds out its specialty business segment, “making the combined operations a significant player in the space.”

The ratings agency noted, however, that there remains the execution risk of integrating Ironshore’s operations into the Liberty Mutual organization and, while the combined business will have increased scale and added capacity, market conditions remain challenging, particularly for organic growth.

As A.M. Best initially commented on Dec. 5, 2016 when the acquisition was announced, the ratings of Liberty Mutual Holding Co. and its subsidiaries remain unchanged. A.M. Best said the modest size of the transaction, along with Ironshore’s historical profitability, limits LMHC’s execution and integration risks associated with the acquisition.