Main Street America will continue to operate as a standalone entity
On May 4, 2018, American Family Insurance Group, based in Madison, Wisconsin, and Florida’s The Main Street America Group jointly announced they would merge.
“This merger will give policyholders – particularly small business owners – more insurance products to choose from and more ways to buy them,” said Jack Salzwedel, chairman and CEO of the American Family Insurance group. “Given our focus on policyholders and agents, that’s a win.”[pullquote]The “A” rated American Family Insurance is currently the 16th largest Property & Casualty insurance company in the United States with a 1.32% market share[/pullquote]
“Both companies are able to immediately take advantage of our unique marketplace positions, as well as the ability to bring new value to each of our agency distribution systems,” said Tom Van Berkel, Main Street America’s chairman, president and CEO. “Our ability to sell new products through our independent agent-customers will help us and our agents profitably grow, while simultaneously bringing American Family enterprise products to a different policyholder base.”
Having been approved by both companies’ boards of directors, the proposed merger will not involve any capital outlay by either insurer. The merger, which is expected to close by the fourth quarter of 2018, still needs the formal approve by each of the companies’ mutual policyholders as well as the appropriate state regulators.
Policyholder equity to exceed $9 billion
The “A” rated American Family Insurance is currently the 16th largest Property & Casualty insurance company in the United States with a 1.32% market share and approximately $8,363,930,038 in Direct Written Premium and $8,136,215,509 in Direct Premium Earned.
According to the official announcement, the combined equity of the merged entities will surpass $9 billion, likely resulting in an increase in American Family Insurance’s ranking in the year to come. In 2017, American Family officially became a mutual holding company which allows mergers like this possible.
As for Main Street America, the insurer will continue to operate as a stand-alone brand within the American Family Insurance group similar to Boston-based Homesite, which was acquired by American Family Insurance in 2013. Dating back to 1923, Main Street America has more than $1.2 billion in premium written exclusively via its 3,000 independent insurance agents. The 95-year-old “A” rated company sells both personal and commercial insurance underwriting more than 600,000 property/casualty policies in 37 states, as well as 50,000 bonds in 47 states and the District of Columbia. The merger will not affect the insurer’s strong affiliation with Trusted Choice®.
No other changes with respect to each of the companies’ employees and operations are expected to change as a result of the merger. American Family Insurance currently boasts 11, 700 employees across the country while Main Street America has a total employee count of approximately 900.
The merger will aid both companies’ geographic reach and product offerings
Upon the merger of the two companies, American Family and Main Street America will begin to offer each other’s products in order to provide a wider array of offerings to each companies’ client base. Plans include offering American Family commercial products along with Main Street America products, as well as offering Main Street America personal lines products with American Family enterprise products under the Main Street America brand.[pullquote]With a heavy concentration on the East Coast, Main Street America will help extend the reach of the American Family group.[/pullquote]
“Our commitment to our exclusive agency force has never been stronger,” said Salzwedel. “This merger will give our agents more products to offer policyholders while providing the American Family Insurance group another avenue through which to sell products – independent agents.”
“The partnership with American Family creates tremendous potential for Main Street America and our valued independent agent-customers,” added Van Berkel. “The ability to leverage American Family’s powerful technology platforms will enable us to deploy products more rapidly and make it easier for agents and insureds to transact business with us.”
American Family’s product mix will diversify significantly, increasing its commercial lines share from 8 percent to 14 percent of the combined entity’s direct written premium. Both of the companies’ geographic footprint will also expand as a result of the merger.
“When you have a merger of this magnitude, you fear the process will be arduous. But, it’s been great working with Tom (Van Berkel) over the past six months. He’s been a visionary, identifying early on how a merger could enhance both companies,” said Salzwedel. “The benefits to policyholders and our companies became clear. With a heavy concentration on the East Coast, Main Street America will help extend the reach of the American Family group. American Family, in turn, will help bring new products and technology to Main Street America and its policyholders.
“We will continue to strategically expand our enterprise,” added Salzwedel. “When we see growth opportunities that provide more options and value for policyholders, we will pursue them.”
