Aon said the sale would boost the company's specialty property and casualty reserves by about $100 million. Aon is the second-ranked broker, according to Best's Review's ranking of the top global insurance brokers.
The transaction also involves the transfer of about $300 million of unearned premium and claim reserves now on the books of Virginia Surety Co.relating to business previously written through CPG. Aon previously had announced the sale of its Aon Warranty Group, which includes Virginia Surety, to Toronto-based Onex Partners for about $710 million (Best's Review, August 2006).
Aon said its sales of CPG, Aon Warranty and Virginia Surety are expected to be completed sometime during the fourth quarter of 2006. The boosting of Aon's specialty property and casualty reserves is expected to be effective in the third quarter of 2006.
In a statement, Aon's president and chief executive officer, Greg Case said the sale continues the company's strategy of exiting the property and casualty underwriting business, and that Aon has placed the remainder of its specialty property and casualty programs in runoff. "We believe this will enable us to focus our attention and resources on our core businesses," Case said.
The majority of the $100 million increase to reserves, Aon said, is earmarked for losses related to National Program Services Inc., a now-defunct independent managing general agent that wrote habitational risk on behalf Virginia Surety. In 2002, Aon announced it was taking losses related to alleged fraud and breach of contract at National Program Services (BestWire, May 31, 2002).