Acquisition Expands Operations across Texas and Enhances Energy Capabilities

NEW YORK--(BUSINESS WIRE)-- Marsh, a global leader in insurance broking and innovative risk management solutions, today announced that it has reached agreement to acquire Houston-based Wortham Insurance, one of the premier independent insurance brokerage firms in the United States. Terms of the transaction, which is expected to close in the third quarter of 2018, were not disclosed.

Founded in 1915, Wortham has more than 530 colleagues based in its Austin, Dallas, Fort Worth, Houston, and San Antonio offices. It provides property/casualty insurance, surety, personal lines, and employee benefits advice and solutions to a wide range of businesses and individuals throughout the US, with particular expertise in energy, power, construction, and retail sectors in addition to managing several specialty programs.

Upon completion of the transaction, Marsh will expand its footprint in Texas to include the Austin and Fort Worth markets and will merge its existing operations in Dallas, Houston, San Antonio, New Orleans and Tulsa with Wortham. The combined business will operate as Marsh Wortham with Richard M. Blades, who is currently Chairman of Wortham, as its CEO. He will report to Martin South, President of Marsh’s US and Canada division. Mr. Blades will also serve as Chairman of Marsh’s Energy & Power Practice in the US.

Commenting on the transaction, John Doyle, President & CEO of Marsh, said: “Wortham Insurance is an outstanding firm with a reputation for creating lasting client relationships and deep risk expertise. Together with Wortham’s well-respected management team and colleagues, we will deliver market-leading risk and insurance solutions to businesses and individuals.”

“Marsh and Wortham are very similar in terms of our approach to business, ability to form deep client relationships, and our values,” added Mr. South. “The combination of our firms in this vital US region will deliver greater value to clients, colleagues and prospects through an enhanced value proposition, strong risk expertise particularly in the energy sector, and unparalleled client focus and service.”

Mr. Blades added: “Joining Marsh, a firm that shares our strong client-focused values, is great news for both clients and colleagues. Wortham’s clients will continue to work with their existing service team including having the flexibility to utilize their existing international brokers while gaining the benefit of access to the wide range of global capabilities and product offerings of Marsh.

“Clients and colleagues will benefit from Marsh’s commitment to helping clients anticipate and meet the challenges of changing times and technologies. I look forward to leading Marsh Wortham with an entrepreneurial spirit in providing outstanding local service, while bringing our collective world-class expertise to businesses and individuals across the region.”

About Marsh

A global leader in insurance broking and innovative risk management solutions, Marsh’s 30,000 colleagues advise individual and commercial clients of all sizes in over 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE:MMC), the leading global professional services firm in the areas of risk, strategy and people. With annual revenue over US$14 billion and nearly 65,000 colleagues worldwide, MMC helps clients navigate an increasingly dynamic and complex environment through four market-leading firms. In addition to Marsh, MMC is the parent company of Guy Carpenter, Mercer, and Oliver Wyman. Follow Marsh on Twitter @MarshGlobal; LinkedIn; Facebook; and YouTube, or subscribe to BRINK.

About Wortham

Founded in Houston in 1915, Wortham Insurance is one of the largest independent brokers with headquarters in Texas. Wortham specializes in insurance brokerage, risk management programs and employee benefits consulting. In addition to its Houston headquarters, Wortham maintains offices in Austin, Dallas, Fort Worth, and San Antonio. Annually, Wortham places client premium in excess of $1 billion through its limited partnership – John L. Wortham & Son, L.P. – operating under the general partnership of Wortham, L.L.C.

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Marsh

Jason Groves, +44 7733 325 587

[email protected]

Source: Marsh

A federal appeals court upheld a lower court ruling last week that voided two life insurance policies with a combined face value of $8 million, finding they were illegal stranger-originated life insurance, or STOLI, policies under New Jersey law.

The Court of Appeals for the Third Circuit affirmed summary judgment in favor of Lincoln National Life Insurance Co., rejecting claims by Retirement Value LLC, which sought to collect death benefits after the insured, Haya Majerovic, died in 2019.

The dispute centered on two policies originally issued in 2007 by Jefferson Pilot Life Insurance Co., a predecessor to Lincoln. The policies insured Majerovic's life for a total of $8 million and were ultimately purchased by Retirement Value after a series of transfers.

Lincoln filed suit in 2021 seeking a declaration that the policies were void from inception because they lacked a valid insurable interest and were structured to benefit investors with no relationship to the insured.

At issue is which state laws apply to the Majerovic policy. The insurance company argued that New Jersey law is applicable in the case, while Retirement Value claimed New York as the controlling state law because Majerovic was a resident of that state.

Panel: New Jersey law applies

The appeals court agreed with the lower court that New Jersey "was plainly the place of contracting.

"The policies were applied for by a New Jersey-based trust, the application was signed in New Jersey, the policies were issued for delivery to the Trust at its New Jersey address, and the Trust received the policies in New Jersey," wrote Judge Luis Felipe Restrepo, writing for the three-judge panel. "Moreover, the application’s cover letter stated that the application 'has been signed in NJ because it will be owned by a NJ trust.'"

Applying New Jersey law, the court concluded the policies were classic STOLI arrangements because investors with no insurable interest in Majerovic's life were the intended beneficiaries from the outset.

New Jersey law and the state's Supreme Court have consistently held that STOLI arrangements violate public policy and are void from inception.

"The investors had no insurable interest in the life of the insured but yet were the intended beneficiaries of her life insurance policies," Restrepo wrote.

Retirement Value also challenged the dismissal of its claim seeking reimbursement of premiums paid on the policies. The appeals court ruled that the company had waived the argument by failing to adequately raise and support it in the district court proceedings.

The ruling leaves intact a 2024 decision by District Judge Robert Kirsch, who found the policies "undoubtedly" qualified as STOLI policies and granted summary judgment to Lincoln.

The decision represents another victory for insurers challenging investor-backed life insurance arrangements that courts have increasingly scrutinized as illegal wagering contracts lacking a legitimate insurable interest.

No premium paid

According to court documents, Majerovic's son entered into an agreement with investors in 2007 under which he would obtain life insurance on his mother's life while the investors funded all premium payments. The investors were entitled to 90% of the policy's value upon sale or maturity, while the family would receive 10% after deducting premium costs.

The investors were identified as two religious organizations, Congregation Sons of Ateres Joshua and Congregation Beis Shloma.

The policies were owned by the Haya Majerovic Family Trust, based in Lakewood, N.J., court documents say. The trust applied for the coverage, received delivery of the policies in New Jersey and later sold them to James Settlement Services, which subsequently sold them to Retirement Value.

The Majerovic family never paid any premiums on the policies, according to the court.

After Majerovic died in November 2019, Retirement Value submitted claims seeking payment of the death benefits. Lincoln denied the claims and challenged the validity of the policies.

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