By James Thaler

April 21 - (The Insurer) - Blue Cross Blue Shield of Michigan is working with JP Morgan on a sale process for the nearly $2 billion surplus AF Group, a commercial lines carrier that wrote nearly $2.9 billion in direct premiums in 2024, broking, carrier, and banking sources told The Insurer.

Sources said that BCBS Michigan and its advisor JP Morgan are exploring a potential transaction that could value AF Group at 1.5 times its $1.974 billion year-end 2024 policyholder surplus, meaning that a deal for the property-casualty operations could be valued at just shy of $3 billion.

Sources said JP Morgan has recently approached a number of potential strategic acquirers about exploring a deal for AF Group.

BCBS Michigan’s motivation for bringing its property-casualty insurance subsidiary to market for a sale could not immediately be confirmed.

The health insurer parent reported a $1.7 billion underwriting loss for 2024 early last month, as well as a $1.02 billion net loss on enterprise revenue of $40.6 billion.

AF Group and JP Morgan did not immediately respond to a request for comment.

Statutory data from SNL Capital IQ shows that AF Group wrote a little more than $1.5 billion in workers compensation direct premiums in 2024, along with around $450 million in other liability premiums, which is the insurance group’s second largest business line.

AF Group also wrote $291 million in commercial auto business last year as well as $308 million in combined fire and allied lines, $244 million in commercial multi-peril business, and $62 million in marine lines.

A move by BCBS Michigan to sell AF Group represents a significant shift in strategy for the non-profit mutual health insurance company, after AF Group acquired commercial lines insurer AmeriTrust, formerly known as Meadowbrook, from Chinese owner Fosun in early 2023.