Specialty property and casualty (P&C) insurers Core Specialty has now completed its previously announced merger combination with commercial auto specialist Lancer Insurance Group, growing its business into one holding pro forma capital of over $1.1 billion.
The merger was announced back in April 2021, with Lancer expected to operate as a separately managed Division of Core Specialty, retaining the Lancer brand and management team.
Core Specialty said the merger will further its momentum in building a leading out a specialty insurance group, as well as deepening its participation in the commercial auto market, where it noted that rates have been escalating.
The merger agreement was a stock and cash transaction and helps to turn Core Specialty into a more diversified company, with a clean balance sheet and over $1.1 billion in equity capital.
It is Core Specialty’s first merger or acquisition since it recapitalised StarStone U.S. in November 2020 and now the combined Lancer and Core Specialty group has approximately 600 total employees.
Lancer shareholders received a combination of Core Specialty common shares, preferred shares and cash in the merger, with the shares set to mandatorily convert into common shares upon a Core Specialty initial public offering or certain other specified events.
Lancer’s existing shareholders will also retain the financial impact of development on Lancer’s existing reserves for losses and loss adjustment expenses over a five-calendar year period within a specified symmetrical range, the companies said.
Finally, the announcement said that the merger transaction is expected to be accretive to Core Specialty’s earnings per share and return on equity in 2022.
Jeff Consolino will remain in charge as President and CEO of the combined company, while Ed Noonan will continue as Core Specialty Executive Chairman.
Dave Delaney, Lancer’s CEO, will take a seat on the Board of Core Specialty and will work closely with Consolino and senior members of the Lancer and Core Specialty teams to integrate the businesses.
The Core Specialty Board of Directors will now consists of the current Board with the addition of Delaney, while Matthew Jenkins, Lancer’s President & Chief Operating Officer, will serve as President of Core Specialty’s Lancer Division.
Jeff Consolino stated, “From conception, Core Specialty’s vision has been to become the leading specialty insurer and the Lancer merger continues our very strong progress in our mission. Core Specialty has the capital to take on risk, the underwriting talent in place, a proven and decisive leadership team and a track record of making things happen fast. Collectively and in each of our specialist niche business units, we intend to operate with strong entrepreneurial spirit and drive, speed, agility, and empowered decision-making.
Lancer is a leader in the specialty transportation market with a long track record and a senior management team we know and admire. Lancer will operate as Core Specialty’s ninth specialty P&C business unit.”
Dave Delaney, Co-Founder and CEO of Lancer, also commented, “All of us at Lancer are excited to join forces with Core Specialty. Core Specialty’s management team is exceptional, and our friendship with Jeff Consolino, Ed Noonan and members of Core Specialty’s Board goes back a very long way. I have no doubt Lancer and Core Specialty’s combined operating and financial resources will create tremendous growth opportunities for our shareholders, employees, policyholders and distribution partners.”
“I have known Dave Delaney for over 30 years. He is an excellent specialty P&C insurance operator, and I am excited that he will be joining the Core Specialty Board. We have assembled a Board for Core Specialty comprised of company founders and business builders which we believe is second to none, and Dave’s talents will add meaningfully to our Board. We are also pleased and honored that after decades of building Lancer as an independent, family-controlled enterprise that Dave and his co-shareholders have the confidence in Core Specialty’s management, business plan and investors to exchange their Lancer equity for the opportunity to join their future prospects with ours,” added Ed Noonan, Executive Chairman of Core Specialty.