Summary
The Hartford Financial Services Group, Inc. (HIG) announced the successful closing of its acquisition of The Navigators Group, Inc. on May 23, 2019. This strategic move involved merging Navigators into a wholly-owned subsidiary of The Hartford, with Navigators shareholders receiving $70.00 in cash per share. This acquisition is a significant development for The Hartford as it expands its market presence and capabilities. In conjunction with the acquisition, The Hartford also entered into an Aggregate Excess of Loss Reinsurance Agreement for its newly acquired Navigators subsidiaries with National Indemnity Company, a subsidiary of Berkshire Hathaway. This agreement provides reinsurance coverage for adverse loss reserve development on past business, which is expected to result in a one-time after-tax loss of approximately $72 million in the second quarter of 2019. Investors should note this transaction impacts current quarter earnings but provides financial protection against unforeseen reserve issues.
Key Highlights
- 1The Hartford has completed the acquisition of The Navigators Group, Inc. for $70.00 per share in cash.
- 2The acquisition was finalized on May 23, 2019, with Navigators now operating as a wholly-owned subsidiary.
- 3An Aggregate Excess of Loss Reinsurance Agreement has been put in place for the acquired Navigators entities with National Indemnity Company (a Berkshire Hathaway subsidiary).
- 4The reinsurance agreement covers $300 million of adverse net loss reserve development for prior accident periods.
- 5The company expects to record a pre-tax loss of approximately $72 million (after tax) related to this reinsurance agreement in Q2 2019.
- 6The reinsurance premium paid to National Indemnity Company is approximately $91 million.