Sedgwick to acquire Cunningham Lindsey

Source: sedgwick

Sedgwick Claims Management Services, Inc., a leading global provider of technology-enabled risk and benefits solutions, has signed an agreement to acquire Cunningham Lindsey, a global loss adjusting, claims management and risk solutions firm.

An industry pioneer with 100 years of experience, Cunningham Lindsey assists businesses, insurance companies, brokers and policyholders around the world by offering expert support when losses occur, such as during natural disasters. The company’s 6,000 highly skilled professionals comprise local teams in 600 offices across 60 countries.

“Bringing the incomparable talent, expertise and robust global capabilities of Sedgwick, Vericlaim and Cunningham Lindsey under one umbrella is among the greatest stories to emerge from the claims industry in many years,” said Michael Arbour, Sedgwick group president. “This exciting development puts us in an optimal position to meet the increasingly complex needs of clients around the world.”

The Cunningham Lindsey group includes a range of services addressing all aspects of the risk management life cycle, including pre- and post-loss; their specialties in loss adjusting, third-party claims administration, global account management, forensic engineering, and restoration and repair consulting, among others, notably complement the existing offerings of Sedgwick and subsidiary Vericlaim.

“Joining forces with Sedgwick and Vericlaim presents an opportunity to provide our clients an end-to-end service solution around the world,” said Jane Tutoki, global CEO of Cunningham Lindsey. “Our vision is to align our complementary services and further grow the reach to a scale that will help redefine the expertise and talent we can offer. We are excited about the next step in this journey with Sedgwick and Vericlaim to offer a truly global path to transform the way we provide our services together.”

The strategic acquisition of Cunningham Lindsey enhances Sedgwick’s status as the leading global provider of innovative risk and benefit solutions and broadens the company’s international footprint, Arbour said. Following the close of the transaction, the Sedgwick family will be more than 20,000 colleagues strong.

“At Sedgwick, taking care of people is at the heart of everything we do, and we know that Cunningham Lindsey shares our commitment to caring for people when the unexpected occurs,” said David A. North, Sedgwick president and CEO. “Together, we will have the capacity to reach more individuals in their time of need in more locations than ever before.”

The closing of the transaction is subject to customary conditions and regulatory approvals. 

Caisse to invest more than US$400M to acquire minority stake in insurer Hyperion

The Caisse de depot et placement du Quebec has signed a deal to acquire a significant minority stake in Hyperion Insurance Group.

Under the agreement, the Caisse says it will invest more than US$400 million in the company as a long-term growth partner.

Hyperion is an international insurance group including broker divisions Howden and RKH and underwriting division Dual.

The transaction is subject to regulatory consents.

The Caisse joins investment firm General Atlantic as a partner in Hyperion.

Management and employees will remain the largest shareholder group.


Facebook Closes $19 Billion WhatsApp Deal

Facebook says it has wrapped up its landmark $19 billion acquisition of WhatsApp, a deal that was hashed out in Mark Zuckerberg’s house over the course of a few days in February and sealed over a bottle of Jonnie Walker scotch.

WhatsApp has continued to run its operation completely independently since then, but the closing of the deal marks the start of a gradual integration as Facebook gives the world’s biggest mobile messaging service legal and administrative support and — eventually, we can presume — finds new ways to monetize the company it spent more than Iceland’s GDP on.

WhatsApp founders Jan Koum and Brian Acton became billionaires last February when Facebook announced it was buying the company they had started five years ago for a jaw-dropping $19 billion. Having mostly shunned venture capital investments till then the founders had kept large stakes. Koum still had around 45% at the time of the deal, leaving the Ukrainian-born immigrant to pocket $6.8 billion and former Yahoo YHOO +1.37% engineer Acton with $3.5 billion after taxes. WhatsApp founder Jan Koum now gets a seat on the Facebook board and will match Zuckerberg’s $1 salary.

Facebook will now award 177.8 million shares of its Class A common stock and $4.59 billion in cash to WhatsApp’s shareholders, it said in an SEC filing over the weekend, plus 45.9 million shares (restricted stock units) to WhatsApp’s employees to complete the deal.

Fortunately for those parties, the value of Facebook’s shares are now higher than they were when the deal was announced in February, notes Re/code’s Peter Kafka, making the deal worth around $21.8 billion.

The acquisition has gone through a few regulatory hoops, but it passed the final one last Friday when the European Union gave it the green light.
WhatsApp makes money by charging a $1 a year subscription in a handful of countries that have clear carrier billing systems and where credit card penetration is high, bringing in about $20 million in annual revenue, according to Forbes’ estimates. That’s not enough to justify a $19 billion price tag, so Facebook is almost certainly looking at other ways the messaging service could make money.

WhatsApp is the most globally diverse messaging service, with more than 600 million monthly active users from Europe to South America to Asia, so some kind of money transfer service for the world’s increasingly globalized workforce might be one way.

Facebook’s interest in the field of money transfer is well known. In April we reported that Facebook had been working since late 2013 on a European-wide money-transfer and storage service. Two months later it hired PayPal CEO David Marcus as head of the company’s “Messaging Products.” Then last week screenshots tweeted by a Stanford computer science student showed Facebook had already put elements of a payments infrastructure into place in Messenger for iOS, which had yet to be activated.

By Parmy Olson | Forbes Staff

Facebook to Buy Messaging App WhatsApp for $19 Billion

Facebook Inc. (FB), the world’s largest social network, agreed to purchase mobile-messaging startup WhatsApp Inc. for as much as $19 billion in cash and stock, the biggest Internet acquisition in more than a decade.

The accord includes $12 billion in stock, $4 billion in cash and $3 billion in restricted shares, Facebook said in a statement yesterday. It’s the largest Internet deal since Time Warner’s $124 billion merger with AOL in 2001, according to data compiled by Bloomberg. WhatsApp has more than 450 million members, with 1 million users being added daily.

Facebook Chief Executive Officer Mark Zuckerberg, who bought photo-sharing service Instagram for about $700 million in 2012, has been adding applications such as messaging and news to court smartphone and tablet users. WhatsApp, which would be the company’s biggest acquisition, competes with apps from Twitter (TWTR) Inc., Kik Interactive Inc. and Snapchat Inc., the photo-message startup that rebuffed a $3 billion Facebook bid last year.

“They seem to have made a pretty strong statement with this acquisition,” said Debra Aho Williamson, an analyst at EMarketer Inc. “Facebook has come to the realization that it needs a portfolio of apps to reach people with different use cases, different demographics, or different ways of communicating.”

Market Value

The deal prices WhatsApp at more than half the $31.5 billion market value of microblogging service Twitter, which has 241 million active users. The shares of Menlo Park, California-based Facebook fell less than 1 percent to $67.82 at 9:32 a.m. in New York.

“Facebook is clearly taking out one of its main competitors,” Paul Sweeney, a Bloomberg Industries analyst, said in an e-mail. “They are buying 450 million loyal users and an extraordinary growth story, but at a staggering cost.”

Mountain View, California-based WhatsApp, which is popular in Europe, lets users send messages through its service on mobile devices based on different operating systems including Apple Inc. (AAPL)’s iOS, Google Inc.’s Android, Microsoft Corp. (MSFT)’s Windows Phone and BlackBerry Ltd.’s software.

Unlike traditional text messages, which consumers pay for through their mobile-phone plans, WhatsApp is free for the first year, and costs 99 cents a year after that. It also competes with Tencent Holdings Ltd. (700)’s WeChat in China, KakaoTalk in Korea and Line in Japan, as well as Facebook’s own application, Facebook Messenger.

BlackBerry, Viber

The purchase of WhatsApp, which carries a $2 billion breakup fee, will probably avoid a U.S. antitrust challenge, Harry First, a professor at New York University School of Law, said in an interview. “This is not the only message-sharing app for free. How hard is it to start up another one?”

BlackBerry, which owns a WhatsApp rival called BlackBerry Messenger, rose after Facebook’s announcement. The smartphone maker climbed as much as 9 percent to $9.82 in late trading.

Tencent fell 3.1 percent in Hong Kong trading.

Rakuten Inc. (4755), the Japanese online retailer controlled by billionaire Hiroshi Mikitani, last week agreed to buy the Viber instant-messaging and calling service for $900 million. At that price, Rakuten is paying $3 for each of Viber’s 300 million users, while Facebook is paying as much as $42 for each of WhatsApp’s.

Ad-Free Service

“They just took out their primary threat and they recognize that overnight it makes them the leader in the mobile messaging space,” said Jim Patterson, CEO of San Francisco-based Cotap Inc., a messaging service for businesses. “It was clearly the first mobile app other than Facebook that was going to get to 1 billion users.”

Jan Koum, WhatsApp’s 38-year-old CEO, co-founded the company with Brian Acton, 42, in 2009 after almost a decade as an engineer at Yahoo! Inc. Venture capital firm Sequoia Capital invested $8 million in WhatsApp in 2011, for a more than 15 percent stake that is now worth about $3.5 billion, according to people with knowledge of the deal.

While Facebook has touted its progress adding more advertising revenue on mobile devices, Koum has been strict about keeping ads out of WhatsApp’s messaging service.

Koum said in a statement yesterday on the company’s website that WhatsApp will remain autonomous and operate independently.

“There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product,” he said.

Excerpted article By Sarah Frier, Bloomberg

Desjardins to grow its home, auto insurance business with State Farm Canada deal

State Farm’s Canadian business is being acquired for an undisclosed price by the Desjardins Financial Group, which expects to gain about 1.2 million customers in several provinces.

The Quebec-based financial co-operative, headquartered in Levis near the provincial capital, will operate the business as a separate unit with about 1,700 State Farm employees and 500 agents.

Desjardins expects the deal will close in about a year, in January 2015, after going through the regulatory review process.

The transaction would make it Canada’s second-largest provider of property and casualty insurance, which includes home and auto coverage as it would nearly double annual premiums written to $3.9-billion from about $2-billion, Desjardins said in a statement Wednesday.

It also strengthens Desjardins Group’s position as the fourth-largest life and health insurer in Canada, it added.

The deal was announced jointly by Desjardins, State Farm’s current owner based in Bloomington, Ill., near Chicago and Credit Mutuel, a Paris-based European financial co-operative.

State Farm will invest $450 million in non-voting preferred shares of the Desjardins Group’s property and casualty business after the deal closes, while Credit Mutuel will invest $200 million.

Desjardins says it will allocated about $700 million to support growth of the property and casualty insurance business. In addition, its life and health subsidiary, Desjardins Financial Security and other units will allocate $250 million for the State Farm Canada life insurance, mutual fund, lending and living benefits operations.

“This acquisition will allow Desjardins to develop a broader, multi-channel distribution network across the country, while continuing to meet the needs of State Farm’s Canadian client base,” said Monique Leroux, Desjardins Group’s president, CEO and chair of the board.

“At the same time, it will enhance our position in Canada by expanding our customer reach and achieving economies of scale.”

State Farm chairman and CEO Edward Rust said the deal will build on the client base that its Canadian employees and agents have built in Ontario, Alberta and New Brunswick.

“This combination creates a leading platform with new opportunities for growth and success for our employees, agents and customers,” he said.

“State Farm’s financial investment in the newly combined P&C business and licence to use the State Farm brand reflect our confidence in the strength of the combined business going forward.”

Michel Lucas, president of Credit Mutuel, said that its investment with long-time partner Desjardins “is part of our policy of diversification, both in France and abroad.”

“It also illustrates our interest in actively contributing to the launch of the second-largest P&C insurer in Canada and to its growth in the Canadian market.”

Moody’s Investors Service maintained its ratings for Desjardins but said the transaction creates risks, mainly because of the increased exposure to the high-risk Ontario personal auto insurance market, which will make its insurance operations “a less predictable source of earnings.”

Nearly 90 per cent of State Farm’s premiums are based in Ontario while personal auto represents 72 per cent of premiums.

Personal auto insurance in Ontario is higher risk because of regulatory intervention to cut rates and lawsuit trends.

That risk is partially offset by protections built into the transaction’s structure, Moody’s said.

“The transaction is conservatively structured and financed, mitigating the risk to Desjardins Group,” said David Beattie, a Moody’s vice-president. “Moreover, we expect Desjardins General Insurance Group’s credit profile to strengthen over time as it re-underwrites the acquired portfolio.”

Meanwhile, Desjardins’ Tier 1 capital ratio will remain above its target of 15 per cent, which is very strong compared with peers.


Twitter announces in a Tweet it’s going public

NEW YORK, N.Y.—Twitter is going public. The short messaging service aptly tweeted on Thursday it has filed confidential documents for an initial public offering of stock.

Twitter is going public, files plans for IPO
Twitter is going public. “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.”

But the documents are sealed, as Twitter is taking advantage of federal legislation passed last year that allows companies with less than $1 billion (U.S.) in revenue in its last fiscal year to avoid submitting public IPO documents.

San Francisco-based Twitter Inc. posted on its official Twitter account Thursday afternoon that it has “confidentially submitted an S-1 to the SEC for a planned IPO.”

The confidentiality will likely help Twitter avoid the public hoopla that surrounded the initial public offerings of other high-profile social networking companies, including Facebook Inc., which went public in May 2012.

Twitter’s IPO has been long expected. The company has been ramping up its advertising products and working to boost ad revenue in preparation.

Most of Twitter’s revenue comes from advertising. Research firm eMarketer estimates that Twitter will make $582.8 million in worldwide ad revenue this year, up from $288.3 million in 2012.

By comparison, Facebook had ad revenue of $1.6 billion in the April-June quarter of this year. By 2015, Twitter’s annual ad revenue is expected to hit $1.33 billion.

Goldman Sachs Group will be the lead underwriter for the IPO, according to a person familiar with the matter who asked not to be identified because the information isn’t public.

Twitter was valued last month at about $10.5 billion (U.S.) by GSV Capital, one of its investors, up 5 per cent from a May estimate.

Excerpted from TheStar

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