Arch Capital Closes McNeil Buyout, Boosts Underwriting Skill
Arch Capital Group Ltd.ACGL recently completed its previously announced buyout of McNeil & Co. that will enable the property and casualty (P&C) insurer to cater to its clients’ needs more effectively with better services offering of opportunities to its team. However, financial details of the transaction have been kept under wraps.
On Nov 1, 2018, the P&C insurer inked a deal to acquire McNeil, which built a reputation of becoming a nationwide leader in specialized risk management and insurance programs for years now. Established in 1989, Cortland, NY-based McNeil has been helping its clients manage the risks in their respective businesses through a consultative approach. Its operations include more than 1,300 retail agents in the United States.
McNeil already boasts a successful working relationship with Arch Capital over the past many years. It has successfully generated $153.7 million of premiums for Arch Insurance (subsidiary of Arch Capital) in 2017. Post completion of the acquisition, McNeil will function in an independent manner while lending support to Arch Insurance’s program division.
The buyout is expected to add value to Arch Capital’s service portfolio with the insurer leveraging McNeil’s solid reputation in the program space. Also, the company’s underwriting experience will be enhanced to help serve clients more efficiently and effectively. McNeil’s exceptionally talented team will prove to be an asset to the acquirer’s operations, thereby enabling it to extend its capabilities that will ultimately meet the clients’ specific demands.
In turn, McNeil will gain traction from the financial strength and depth offered by Arch Capital. With this buyout, the company’s customers will be assured with a promise of consistent service and capital resources proposed by Arch Capital.
Given that both companies share the same set of values, this transaction will solidify the program relationship between the two.
Arch Capital has been focusing on improving its inorganic growth story through strategic consolidations, which in turn, will allow the company to expand internationally, add more capabilities, boosts operations and diversify its business as well.
Shares of this Zacks Rank #3 (Hold) P&C insurer have lost 8.3% year to date against the industry ‘s increase of 1.3%. We expect premium growth, strategic initiatives and a robust capital position to turn the stock around in the near term.
Insurers on Integration Spree
Taking the insurance industry’s all-time high available capital into account, there have been a significant number of acquisitions in the space of late. Recently, Arthur J. Gallagher & Co. AJG purchased 40% equity interest in PT IBS Insurance Broking Service and a 100% stake in IBS Re Singapore. In November, Brown & Brown, Inc. BRO bought Hays Companies to ramp up its employee benefits business while Marsh & McLennan Companies, Inc.’s MMC unit Mercer acquired Summit Strategies Group.
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