Core Specialty Insurance has reached an agreement for the acquisition of SMG from American National Group for an undisclosed sum.
SMG is engaged in providing credit-related insurance products in the US, with more than six decades of industry experience.
The acquisition is expected to enhance Core Specialty’s position in the financial services insurance market.
SMG, which reported $388m in direct premiums written in 2023, has a presence in the bank, automobile dealership, finance company and credit union sectors.
This transfer will see Mark Walker, formerly of American National, leading Core Specialty’s new financial services division as president.
This division becomes the 16th specialty business unit under Core Specialty’s Bond, Credit & Guarantee subsegment, which also includes the mortgage reinsurance division and the upcoming surety division, pending the completion of the American Surety Company transaction.
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By GlobalDataCore Specialty will pay American National a renewal rights premium for the SMG business renewed over 12 months.
Additionally, Core Specialty will assume the unearned premium reserve linked to SMG.
A prospective quota share reinsurance agreement has also been established, under which American National will cede, and Core Specialty will reinsure, 100% of the SMG business, starting 1 January 2024.
Until Core Specialty’s product filings are approved, American National will continue to issue new and renewal policies and receive a fronting fee.
Core Specialty anticipates the latest move will add to its earnings per share and return on equity this year. The staff servicing SMG will now join Core Specialty.
The transfer does not include the acquisition of any insurance company entities nor the loss reserves related to SMG, which will remain with American National.
Core Specialty founder, president and CEO Jeff Consolino said: “We are pleased to work in collaboration with American National for a second time after the 2023 acquisition of the Medical Stop-Loss business. The Specialty Markets Group business is a line of business we know well and we are excited to add this product line to our Bond, Credit & Guarantee subsegment.
“The products offered by the Specialty Markets Group have shown strong profitability over time, and the transfer of this business will add further diversification to our company.”
Last month, Core Specialty made a minority investment in Gramercy Risk Holdings.
This undisclosed investment is intended to support growth and enhance the specialty, property and casualty business offerings of Gramercy and its subsidiaries.
