With this acquisition, Liberty becomes the second-largest IA carrier in the U.S
In a move to make itself one of the leading IA carriers in the country, Boston-based Liberty Mutual has signed a definitive agreement to acquire State Auto Group. Founded more than a century ago in Columbus, Ohio, State Auto Financial Corporation (NASDAQ: STFC) is a super-regional insurer with more than 10,000 independent agents countrywide. The all-cash deal will see Liberty Mutual acquire all of the publicly held shares of State Auto Financial’s current stock for approximately $52 per share, making the deal valued at just under $2.3 billion.
“State Auto Group’s capabilities and product expertise are an ideal complement to Liberty Mutual’s domestic personal lines and small commercial business, and we welcome 2,000 talented associates to our family,” said Liberty Mutual Chairman and Chief Executive Officer David Long. “Equally appealing are its values. For almost a century, State Auto has celebrated a culture of caring for people, exceptional service and deep philanthropy, mirroring our purpose to help people embrace today and confidently pursue tomorrow.”
“The opportunity to join the Liberty Mutual organization is a direct result of the incredible work of the State Auto team, beginning with the transformation of our business and culture that began in 2015,” said State Auto President and CEO Mike LaRocco. “We’ve become a digital provider of auto, home and business insurance while remaining fully committed to the independent agency system, as we’ve been since our founding 100 years ago. Our partnership with Liberty Mutual will further that commitment to independent agents and contribute to the collective success of our agents, policyholders, shareholders and associates.”
Currently, the sixth-largest auto and home insurer in the U.S. and the fourth-largest P&C insurer – All Lines, the acquisition could potentially propel the Boston-based insurer into the ranks of the top five largest auto carriers nationwide surpassing either USAA or Allstate. The move also follows Allstate’s similar move last year in July of 2020 to increase its auto & home market share with its acquisition of National General Holdings Corporation in a $4 Billion dollar deal.
A super-regional insurer with over 10,000 independent agents
Founded in 1921 in Columbus, Ohio by Robert Pein, State Auto was created out of the frustration Mr. Pein felt by “insurance rates that were too high and claim settlements that weren’t handled fairly.” With the creation of State Auto Mutual Insurance Company, Mr. Pein pledged “…reasonable rates with prompt and fair claim service that remain our hallmark to this day.”
Over the past century, the company has flourished to now claim assets of approximately $4.6 billion. As of today, the company writes approximately $2.3 billion in 33 states exclusively through its independent agent partners.
Liberty Mutual will now have more than 10,000 independent agency partners across the country
Liberty Mutual currently works with approximately 3,400 independent agencies across 33 states, primarily through its Safeco Insurance brand. With the addition of State Auto’s 10,000 independent agents, however, that number grows exponentially. With the incorporation of State Autos IA partners, Liberty Mutual will now boast over 13,400 independent agency partners nationwide, in addition to adding $2.3 billion in premium. As a result, Liberty Mutual will become the second-largest independent agent carrier in the nation, after Progressive.
According to the official company announcement, the transaction was approved by the State Auto Financial’s board of directors (upon the recommendation of a special committee of independent State Auto Financial directors), as well as the State Auto Mutual’s board of directors (upon the recommendation of a special committee of independent State Auto Mutual directors). Pending normal regulatory and mutual member approvals, the deal is slated to close sometime in 2022. As a result of the announcement, the trading price of State Auto Stock increased to approximately $50 as of July 12th.