Selective Enters E&S Market With Buy of Renewal Rights for Alterra E&S Book

Selective Insurance Group Inc. said it has acquired the renewal rights for a $77 million book of commercial excess and surplus lines business from Alterra Capital Holdings Ltd.

The transaction marks Selective's entrance into the E&S market, said Gail Petersen, a spokeswoman for the company. With the transaction, which is expected to close Aug. 1, Selective will write commercial lines contract binding authority E&S policies, the company said.

Terms were not disclosed.

Selective will write the business on Alterra paper during a transition period while Selective establishes a new organization licensed to write E&S business in all 50 states, the company said. Required regulatory approvals, including one for the new organization name, are anticipated before the end of the year.

About 40 Alterra staffers will join Selective under the deal, but will remain in their existing Horsham, Pa. offices, Petersen said.

Joseph F. Morris, former president and chief executive officer of James River Insurance, will lead Selective's new E&S team. Morris has more than 30 years of insurance industry experience, much of that time in E&S. He headed the Philadelphia Contributionship and was president and CEO of Penn-America Group, a specialty property /casualty company with extensive contract binding authority E&S writings, Selective said.

Joe Mossbrook, the head of the CBA division of Alterra E&S, will also join Selective.

Alterra E&S's specialty personal lines business is not included as part of this transaction, Alterra said in a statement.

"Although the CBA division produces a good book of business, we do not believe it is consistent with Alterra's long-term strategy. Our agreement with Selective recognizes the value of our CBA division and ensures its continued operations, which we considered of importance in negotiating the transaction," W. Marston (Marty) Becker, president and CEO of Alterra, said in a statement.

In May, A.M. Best Co. affirmed Selective Insurance Group's (NASDAQ: SIGI) financial strength ratings of A+ (Superior) (BestWire, May 27, 2011).

Rated subsidiaries of Alterra Capital Holdings (NASDAQ: ALTE) currently have Best's Financial Strength Ratings of A (Excellent).

Shares of Selective were trading at $16.80 a share on the morning of July 13, up 1.45% from the previous close. Shares of Alterra were trading at $22.75 a share on the morning of July 13, up 0.4%.

(By Meg Green, senior associate editor, BestWeek: [email protected])