Hub International has agreed to sell its underwriting subsidiaries, Old Lyme Insurance Company of Rhode Island Inc. and Old Lyme Insurance Company Ltd. to Fairfax Inc., effective January 1.

Fairfax is a subsidiary of Fairfax Financial Holdings, Hub’s largest shareholder. Hub, through its Kaye Group Inc. subsidiaries, including its underwriting manager, Program Brokerage Corp., will continue both to manage Old Lyme and to operate Kaye’s Claims Administration Corp. unit, which is not being sold.

Both Old Lyme and CAC have been managed by Kaye subsidiaries since they were formed over 20 years ago. Old Lyme has consistently maintained a combined loss and expense ratio superior to property and casualty industry norms.

The sale, for Old Lyme’s book value as of December 31, 2001, approximately US$42 million, represents no gain or loss to Hub, which will use the proceeds to pay down debt. Completion of the transaction is subject to regulatory approval.

Martin Hughes, chairman and CEO of Hub explained that the sale of Old Lyme aligns Hub’s underwriting arrangement with that of other major public brokers: participation in underwriting opportunities by affiliations or contingency agreements rather than through direct ownership of insurance companies.

“Hub’s mission is to serve our clients primarily as a broker in the insurance marketplace. However, by continuing to manage the insurance companies, our underwriting position will remain an important component of our client service capabilities.”