Arch Insurance North America, a subsidiary of Arch Capital Group, has announced a definitive agreement to purchase the U.S. MidCorp and Entertainment insurance operations from Allianz Global Corporate & Specialty SE (AGCS).

The deal, valued at $450 million in cash, will also include a selection of specialty insurance programs.

The acquisition encompasses businesses currently underwritten by Fireman’s Fund Insurance Company and its subsidiaries, which reported a gross premium of $1.7 billion in 2023.

As part of the agreement, around 500 employees, including those in underwriting, claims, and other professional roles, are set to join Arch Insurance.

Matt Shulman, CEO of Arch Insurance North America, expressed enthusiasm about the expansion into the U.S. middle market, emphasizing the transaction’s potential to enhance distribution channels, diversify product offerings, and strengthen participation in middle-market lines.

The addition of a leading Entertainment business is expected to complement Arch Insurance’s specialty product portfolio.

Tracy Ryan, AGCS’s North American CEO, highlighted the value of the employees transitioning to Arch, noting their historical contribution to AGCS’s MidCorp and Entertainment sectors and the continuity they will bring to existing partnerships.

Arch Insurance, known for its diverse property, casualty, and specialty insurance solutions, has achieved a consistent double-digit growth in its North American business over the past five years, with gross premiums totaling approximately $5.8 billion in 2023.

This transaction is poised to further cement Arch Insurance’s position as a leader in the specialty insurance industry.

Nicolas Papadopoulo, CEO of Arch Worldwide Insurance Group, remarked on the synergistic potential of the merger, anticipating an enhanced middle-market business that aligns with Arch’s client-centric culture and commitment to excellence.

Subject to regulatory approval, the transaction is slated for completion in the latter half of 2024. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are providing financial counsel to Arch, while Willkie Farr & Gallagher LLP is the legal advisor for the company.