Friedman Fleischer & Lowe, LLC ("FFL") and Hellman & Friedman LLC ("H&F"), leading San Francisco-based private equity firms, today announced that affiliates of the firms have entered into a definitive agreement to jointly acquire the CATRisk operation of The St. Paul Travelers Companies, Inc. (NYSE: STA). Financial terms of the transaction were not disclosed.
With offices in Fairfield, California and Baltimore, Maryland, CATRisk is a specialty property and casualty insurer providing coverage for clients with significant catastrophe exposures. The Company provides non-admitted homeowners insurance primarily in Florida and Texas and admitted residential earthquake in California and Washington. CATRisk operates through three interrelated specialty insurance companies: residential earthquake insurers, GeoVera Insurance Company and Pacific Select Property, and surplus lines carrier, USF&G Specialty Insurance Company. For the fiscal year ended December 31, 2004, CATRisk generated gross written premiums of $220 million.
CATRisk's management team, which founded the business in 1993, will continue to lead the business under FFL and H&F's ownership. Kevin Nish will serve as Chief Executive Officer and Karen Padovese will serve as Chief Operating Officer. It is expected that CATRisk's employees will continue in their current positions and that relationships with independent agents, brokers and wholesalers will remain in place.
David L. Lowe, a Vice Chairman of FFL, said: "Both FFL and H&F have long histories of successful financial services investments. The acquisition of CATRisk represents an opportunity to apply our sector expertise to enhance the value of an outstanding specialty insurance operation. We are impressed by CATRisk's world-class underwriting, outstanding distribution network and great reputation in the industry. We look forward to working with Kevin Nish, Karen Padovese and their extraordinarily talented team."
David R. Tunnell, a Managing Director of H&F, added: "We are very excited about this investment. As an independent, well-capitalized company, CATRisk will be strongly positioned to continue providing superior protection to homeowners and to take advantage of the Company's opportunity to grow and expand product and service offerings to its customers."
Mr. Nish said: "This transaction is a positive development for CATRisk, our customers, agents, brokers and employees. Both FFL and H&F have a track record of consistently creating value in their insurance and other financial services investments. We are excited to begin this new chapter in CATRisk's development."
Completion of the transaction, which is expected to occur in the fourth quarter of 2005, is subject to regulatory approvals and customary closing conditions.
About Friedman Fleischer & Lowe, LLC
Friedman Fleischer & Lowe, LLC is a San Francisco-based private equity firm with $1.2 billion under management that is focused on investing in U.S. middle-market companies. Formed in 1998, FFL's strategy is to invest in companies where the substantial strategic and operating expertise of FFL's principals can help management improve margins, make acquisitions and grow earnings. FFL's targeted sectors include financial services, outsourced business services, consumer products, education, healthcare and marketing and media. Previous investments in the financial services sector include Montpelier Re Holdings, Ltd. (MRH), CapitalSource, Inc. (CSE) and Wilton Re Holdings Limited. Other significant investments include Tempur-Pedic International (TPX), Korn/Ferry International (KFY) and Chief Manufacturing. For more information on Friedman Fleischer & Lowe, visit www.fflpartners.com.
About Hellman & Friedman LLC
Hellman & Friedman LLC is a San Francisco-based private equity investment firm with additional offices in New York and London. Since its founding in 1984, the Firm has raised and managed over $8 billion of committed capital and invested in approximately 50 companies. The Firm's strategy is to invest in superior business franchises and to be a value-added partner to management in select industries including financial services, media, professional services, energy and information services. The Firm has pursued investments in the insurance sector for over a decade, which include Arch Capital Group Limited (ACGL), Mitchell International, Inc., and Vertafore, Inc. Other investments in the financial services sector also include the NASDAQ Stock Market, Inc. (NDAQ) and Mondrian Investment Partners. For more information on Hellman & Friedman, visit www.hf.com.