27 July 2017Insurance

Markel acquires State National in $919m deal

US-based Markel Corporation has entered into a definitive agreement to acquire State National Companies, a specialty provider of property/casualty insurance operating in two niche markets - programmes services and lender services, for approximately $919 million.

Under the agreement, which has been approved by both companies' board of directors, Markel will acquire all of the outstanding shares of State National common stock for $21.00 per share in cash.

State National will operate as a separate business unit upon completion of the transaction. The management team, led by Terry Ledbetter, State National's current chairman and chief executive officer will remain in place and continue to be based in Bedford, Texas.

The transaction is expected to close in the fourth quarter of 2017.

According to the statement, State National, which has two core businesses - programme services and lender services, is one of the largest and longest-standing pure-play US insurance fronting business with approximately $1.3 billion in gross written premium in 2016. It also provides collateral protection insurance in the US.

"We are excited to be joining forces with State National—an industry leader with a talented management team that has delivered exceptional long-term results," said Richard Whitt, Markel's co-chief executive officer. "In addition, we are impressed by the cultural fit between our two organisations.

"Strategically, State National will help us to leverage our Insurtech and digital distribution initiatives, diversify our underwriting and fee based portfolios and revenue streams, and add to Markel's third party capital capabilities. Combining Markel's financial strength with State National's unique business model and proven record of success, we are confident that all stakeholders will be well served moving forward."

Ledbetter commented: "After careful and thorough analysis of a range of opportunities, our board of directors determined this transaction with Markel to be in the best interest of State National and our shareholders. We believe the transaction appropriately recognizes the value of State National's business model, recent growth and future market opportunities as a leading specialty provider of property and casualty insurance services operating in two niche markets throughout the United States, and provides our shareholders with an immediate and attractive cash premium for their investment in State National.

"We believe this transaction with Markel is good for our employees and clients, as well as our shareholders. [...]This transaction is all about growth, not cost-cutting, and we believe that State National employees will benefit from being part of a larger, stronger, growth-oriented company with a more diversified platform."

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