Alea has agreed to sell the renewal rights to certain portions of its US primary programme business written
by Alea Alternative Risk (AAR)to New York based AmTrust Group.
The terms of the agreement include an initial advance payment of $12m in cash and also provides for additional cash payments of 3% of gross premiums written in the first five years (to be offset against the $12m) to be capped at $75m.
The company said the consideration over the five-year period is estimated to be in the range of $20m to $40m. The deal is subject to regualtory approval.
In 2004, the AAR business book generated $216.3m in gross premiums and an underwriting profit of $11.2m before allocation of central corporate expenses.
Alea said the remainder of AAR's portfolio will be placed into run-off, and the group will be aligning the remaining staff with the residual operations. It said it estimates
savings of $6m per year from the transaction and realignment.
It added that it anticipates a substantial number of the
110 AAR employees will be offered employment by AmTrust.
Mark L. Ricciardelli, chief executive officer, said: "I am pleased to announce this renewal rights transaction.
"I am also pleased that many members of AAR's strong management and underwriting team, led by AAR's ceo, Rob Byler will be joining AmTrust. We continue to explore all options for the Group and its remaining businesses."
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