Main underwriter Travelers was failed bidder for 123.ie
Published 04/08/2010 | 05:00
US insurance giant Travelers and another major international insurer are understood to have ranked among the under-bidders for online broker 123.ie.
Royal Sun Alliance (RSA) last week announced it had agreed to buy 123.ie for €65m, subject to approval from the Financial Regulator.
The deal took some in the insurance industry by surprise, but informed sources confirmed 123.ie had been on the market with a sales prospectus sent to several interested parties.
US giant Travelers, which had been 123.ie's main underwriter, is understood to have pored over the books and given the purchase serious consideration.
Another major international insurer is also believed to have run the rule over 123.ie, before deciding not to proceed. The extent of other interest is unclear.
The price tag secured by 123.ie raised eyebrows in some quarters given the relatively small size of the broker's premium income, which came in at just €60m in the year to March.
It is understood, however, that 123.ie's business was seen as particularly valuable given its heavy bias towards motor insurance.
While the general insurance market has taken a hammering in recent years, much of the pain has been concentrated in household books where brutal weather triggered massive payouts. "123.ie wouldn't have much household, relatively speaking, so they'd be in better shape than you might think," said one industry source.
A spokeswoman for Travelers yesterday cited a group-wide policy of not commenting on "rumours or speculation relating to mergers and acquisitions".
Under the proposed deal, RSA says it will assume all underwriting for 123.ie, depriving Travelers' Irish divisions of tens of millions in underwriting business.
Asked about the potential impact of that loss, the spokeswoman stressed that Travelers also has substantial commercial business in Ireland.
"Our plan is to grow our retail and commercial businesses," she said.
The company has "no announcement" to make on jobs at its Irish base, and will not reveal how many people are currently employed here, she added.
RSA already supplies insurance through a number of Irish channels, including Tesco Car Insurance and Bank of Ireland household insurance.
The UK-based company, which reports half-year results tomorrow, said it will be Ireland's second biggest general insurer when the 123.ie deal completes.
The prediction hinges on RSA convincing 123.ie customers, most of whom are currently insured by Travelers, to renew their policies with RSA once they expire.