b'Mergers & Acquisitions | Property-Casualty Sector | North America and Bermudawith independent agents. Allstate will become aHedge Fund Reinsurer Consolidationtop five personal lines carrier in the independentNotwithstanding the flow of alternative capital into agent distribution channel by combininginsurance-linked securities (ILS) funds and reinsur-Encompass and Allstates Independent Agentance sidecars [see ILS and Convergence Markets], businesses with National General. total return reinsurers continue to be challenged to State Farm Mutual Automobile Insurance Co. produce profitable underwriting results and higher (State Farm) announced in September 2020 that risk-adjusted investment returns.it is acquiring Texas-based nonstandard auto insurer,In August 2020, Third Point Reinsurance Ltd. (Third GAINSCO, Inc. (GAINSCO), in a $400 million cashPoint Re) and Sirius International Insurance Group, transaction. It will be the first time in State FarmsLtd. (Sirius) announced a combination transaction 98-year history that it has acquired an insuranceworth $788 million, with the combined entity to be company. GAINSCO concentrates on the non-standardrenamed SiriusPoint and based in Bermuda. Once personal automobile insurance market, specializing incompleted, Third Point Re will purchase Sirius from minimum-limits personal auto insurance. its parent company, China Minsheng Investment Another major transaction in the personal autoGroup, which has been under some financial pres-space was one of the largest-value P&C carriersure in recent years (most notably defaulting on US deals of 2020, namely the acquisition ofbond payments in mid-2019). Sirius was reported to Metropolitan Property and Casualty Insurancebe at material risk of being downgraded by the Company (MetLife) by Farmers Exchanges and,ratings agencies without a transaction. The deal its attorney-in-fact, Farmers Group (a subsidiary ofcreates a global company with approximately $3.3 Zurich), for $3.94 billion, from MetLife, which wasbillion of tangible capital. The initial deal was announced in December 2020. In connection withrestructured in September 2020 in the face of a that transaction, MetLife and Farmers established apotential revolt by a class of Sirius shareholders. It is 10-year strategic partnership through whichexpected to close in the first half of 2021.Farmers will offer its personal lines auto and homeLate 2020 saw a public bidding war between Arch products on MetLifes US Group Benefits platform.Capital Group Ltd. (Arch) and Enstar Group Limited This ability to complement Farmers captive agency(Enstar) over ownership of Watford Holdings Ltd. network with MetLifes worksite marketing distribu- (Watford). Ultimately, Arch emerged as the buyer tion channel is understood to be a key motivationby providing an all-cash offer valued at approximately for the deal and illustrates the increased attention$700 million. The sale of Watford followed a call from of carriers in providing insurance products throughits activist investor, Capital Returns Management, employee benefit plans. On a pro-forma basis, theLLC, for it to be sold or put into runoff. Under terms transaction will make Farmers the sixth-largestof the deal, Arch will assign its interests and obliga-personal lines insurer in the US. tions under the merger agreement to a newly formed In November 2020, specialty carrier, Kemperentity of which Arch will own about 40%, while private announced its acquisition of American Accessequity houses Warburg Pincus and Kelso & Company Casualty Co. and its related captive insurancewill each own about 30% of the company. agency, Newins Insurance Agency, which provideAnother hedge fund reinsurer, Greenlight Capital Re, specialty personal auto insurance in Arizona,Ltd. announced in April 2020 that, having partially Illinois, Indiana, Nevada and Texas targeted at thede-risked its investment portfolio and concluded a Hispanic community, for $370 million. strategic review (initially triggered by A.M. Bests MAYER BROWN 7'