XL Group Acquires Insurer of Amusement Parks, Fairs and Festivals

August 11, 2015

XL Group Plc will buy up Allied International Holdings, a U.S.-based outdoor entertainment specialty insurer focused on liability coverage for clients who run amusement parks, fireworks, fairs and festivals.

Neither side is disclosing financial terms, though the deal is expected to close by the 2016 first quarter, assuming various anti-trust and regulatory approvals can be nailed down before then.

With this acquisition, XL Group gets Allied International Holdings subsidiaries Allied Specialty Insurance and T.H.E. Insurance Company, the later of which focuses on the outdoor entertainment industry.

XL Group boosted its presence in the specialty insurance and reinsurance market when it snatched up Catlin Group Ltd. earlier this year for $4 billion, forming XL Catlin. This new, smaller deal gives it a greater focus on outdoor entertainment specialty insurance, a robust but niche market.

T.H.E. Insurance Company launched in 1983 and is privately held. It booked about $70 million of gross written premium in 2014. According to XL Group, the insurer provides general liability, workers comp, inland marine, auto-liability, and some property insurance for clients in the amusement and entertainment industry. Those clients operate in areas including carnivals, amusement parks, fairs, festivals, hot air balloons, fireworks, concessions, family entertainment centers and waterparks. A.M. Best gave it an A- rating.

XL CEO Mike McGavick said that the acquisition makes sense, parent a company that is a leader in niche specialty coverage “with the complex underwriting expertise” that XL Catlin has.

“We look forward to new opportunities to further grow the business and build upon Allied’s exceptional customer service and solid underwriting performance,” McGavick said in prepared remarks.

Mary Chris Smith, chairman and president of Allied Specialty Insurance, said the sale to XL/XL Catlin will allow her company to move toward “new growth and opportunities.”

“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,” Smith said in a prepared statement.

In getting into entertainment specialty coverage, XL will face a number of rivals in the space. Last year, for example, Allianz folded the Fireman’s Fund commercial business (including the entertainment division) into its Allianz Global Corporate & Specialty. Specialty Insurance Group, launched by Everest Re Group last year, offers specialty coverage for sports, leisure and entertainment markets including concerts, carnivals, festivals, fairs and amusement parks, according to its web site.

OneBeacon also had an entertainment insurance division that provides professional liability for entertainment, sports and leisure industries. Originally founded as Entertainment Brokers International, OneBeacon bought up the company in 2008.

There’s also Hamilton Insurance Group, which entered into a share purchase agreement last November to acquire Sportscover Underwriting Limited, a Lloyd’s managing agent which manages Syndicate 3334. Syndicate 3334 writes sports and leisure policies for clients in more than 20 countries.

Source: XL Group