Progressive to acquire American Strategic Insurance
Progressive Corporation is to acquire a controlling position in ARX Holding Corporation, the parent company of American Strategic Insurance (ASI) and its affiliates, for approximately $875 million in cash.
The shares will be purchased primarily from non-management shareholders and will bring Progressive's interest in the company to approximately 67 percent, up from the 5 percent interest it's held since 2012. ASI will continue to operate as a separate company under its current management team.
The transaction is expected to close by April 1, 2015, subject to closing conditions. Additionally, Progressive expects to purchase the remaining shares of the company over the next six years.
"This is a great opportunity for ASI, as our intention has long been to become the Progressive of home insurance," said John Auer, CEO of ASI. "We've been working with Progressive for years and have achieved a great deal together. Now, this transaction will enhance our ability to design and distribute a product offering that will advance both companies and attract a market segment of bundled customers that remains underpenetrated by us both. It also creates a predictable and stable long-term outlook for ASI."
Progressive CEO Glenn Renwick added: "Progressive is committed to becoming the insurance destination brand for consumers. As such, we need the reliable availability of many more products than we intend to manufacture. ASI provides a significant array of the most important products beyond auto. Together we can make our products an even more attractive bundle for consumers and agents.
"I can't think of a situation where the cultural fit could be any better. The business accomplishments and management team of ASI in the homeowners market are simply outstanding. With this move, we are taking an important step to ensure the sustainability of our 'Destination' business strategy, which will still continue to invite and attract participation of other quality providers of products our consumers will want and need. This is also a significant investment in the products that our independent agents are asking for.”
