Liberty Mutual buys State Auto, highlights carrier’s ties to agents

Liberty Mutual announced on Monday it would buy “super-regional” auto insurer State Auto for $ 52 a share in a deal slated to be reached next year.

Liberty Mutual made reference to State Auto’s $ 2.3 billion portfolio of personal, commercial, specialty and agricultural insurance policies in its press release announcing the deal. However, he drew particular attention to the superregional’s links with 3,400 independent insurance agencies in 33 states and said the acquisition would make Liberty Mutual the “second largest carrier in this key distribution channel” .

“The opportunity to join the Liberty Mutual organization is a direct result of the incredible work of the State Auto team, starting with the transformation of our business and our culture that began in 2015,” said the CEO of State Auto, Mike LaRocco, in a statement. “We have become a digital provider of auto, home and business insurance while remaining fully engaged in the independent agency system, as we have been doing since our founding 100 years ago. Our partnership with Liberty Mutual will strengthen this commitment to independent agents and contribute to the collective success of our agents, policyholders, shareholders and partners. “

The deal is expected to be concluded in 2022. The terms are a bit hazy.

State Auto Financial Group’s most recent quarterly report says it had 44,051,645 shares outstanding as of April 30. At $ 52 per share, the conglomerate would be valued at $ 2.29 billion.

However, shares in State Auto Mutual, which owns 58.8% of State Auto, are excluded from the deal, according to a Securities and Exchange Commission filing Monday. It is not clear whether these shares are part of this ordinary share or another class of shares. The Boston Business Journal describes as common stock, which she said would make the purchase price of nearly $ 950 million. State Auto’s hometown newspaper, the Columbus Dispatch, also estimated the $ 1 billion deal.

Either way, although State Auto Mutual now owns 58.8% of the company, Liberty Mutual will own 51% once the deal is closed, according to the SEC file released Monday.

“State Auto Group’s capabilities and product expertise are an ideal complement to Liberty Mutual’s national personal lines and small business ventures, and we welcome 2,000 talented associates into our family,” said Liberty Mutual CEO, David Long, in a statement. “Its values ​​are just as attractive. For nearly a century, State Auto has celebrated a culture of caring, exceptional service and deep philanthropy, reflecting our goal of helping people adopt today and carry on with confidence tomorrow.

The National Association of Insurance Commissioners ranked Liberty Mutual No.6 in private passenger insurance market share in 2020 with nearly $ 11.85 billion in premiums written and $ 11.61 in premiums earned. State Auto posted $ 396.3 million in net premiums written and $ 407.3 million in net premiums earned last year.

The purchase from State Auto will not propel Liberty Mutual to No.5 USAA, which posted $ 15.77 billion in written premiums last year. However, it will keep Liberty Mutual slightly ahead of Farmers, which ranked 7th with $ 9.94 billion in private passenger car bonuses in 2020 but bought the 18th MetLife in April. MetLife racked up $ 2.54 billion in direct written premiums last year, according to the NAIC.

“The acquisition will significantly expand Liberty Mutual’s position as an industry leader in personal and small business insurance,” Liberty Mutual wrote in the press release Monday.

State Auto ranked 49th on CRASH network insurer report card, which asks stores to rate carriers: “How well do this company’s claims handling policies, attitude and payment practices ensure quality repairs and customer service for motorists?” It averaged a C + among the 176 stores that responded. Liberty Mutual ranked 65 with a C rating average among the 903 responding stores.

Despite being a smaller transporter, State Auto is also notable for being something of a poster child for the first electronic loss notice.

Jason Verlen, CCC Product Manager, told Connected Car Insurance USA 2018 that on April 26, 2018, State Auto used IP technology to detect its first accident. Rather than wait for the customer, the insurer called the policyholder – who was “just amazed,” Verlen said.

One hundred years of insurance proceedings – the customer reports the loss – have been overturned, Verlen said.

CCC vice president of product management David Bliss said that “anecdotally” CCC has heard that State Auto customers are “really enjoying this”.

“If you are the victim of an accident and it registers on your activated automatic telematics device, it will notify our National Claims and Risk Engineering (CARE) team” State Auto Quick Care web page states. “We can then help you with the towing and start your claim if you want, saving you time and stress. “

And in other interesting anecdotes about State Auto, the carrier’s commercial insurance arm once confirmed to a Mississippi body shop that it made sure it wanted the repairman to follow OEM procedures.

“We recognize that failure to follow automotive manufacturing recommendations regarding repair procedures may increase the likelihood of repair failure,” State Auto wrote in 2018 in response to a request from Clinton Body Shop. “For this reason, we strongly recommend that all our insureds follow the procedures suggested by the manufacturer as well as the procedures required during repairs. Failure to do so may result in underwriting action on the part of the company, including an increase in the cost of insurance up to and including termination of coverage.

More information:

“Liberty Mutual Insurance strengthens its network of independent agents with an agreement for the acquisition of the State Auto group”

Mutual Freedom, July 12, 2021

Featured Images: Liberty Mutual and State Auto logos are displayed. (Liberty Mutual / PRNewsFoto; provided by State Auto)

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