Kemper reveals $1.3bn deal to buy Infinity
US insurance group Kemper Corporation entered into a definitive merger agreement to acquire auto insurer Infinity Property Casualty Corporation for a total consideration of approximately $1.3 billion.
The payment is based on a cash and stock transaction. The deal is valued at approximately $1.4 billion, according to the Feb. 13 press release.
The transaction is set to create a company with increased scale in nonstandard auto insurance and enhanced ability to serve policyholders.
Infinity is a US-based provider of auto insurance focused on serving the specialty, nonstandard segment. With approximately 2,300 employees, 10,600 independent agents and $1.4 billion in 2017 direct written premiums.
“This compelling transaction combines two well-known brands with complementary strengths and cultures to form a leader in nonstandard auto insurance, and enhances Kemper’s overall growth opportunities, diversification, financial strength, and ability to serve policyholders,” said Kemper CEO Joseph Lacher, Jr.
Infinity CEO Glen Godwin, added: “Together, our two companies have a terrific strategic and cultural fit. As part of a larger company, Infinity will have access to the capabilities and resources necessary to drive accelerated growth and better serve our policyholders and partner agents. In addition, Infinity shareholders will benefit from immediate and certain value for their shares as well as the opportunity to participate in the significant upside potential of the combined company.”
The Kemper family of companies hold $8 billion in assets and offers personalized solutions for individuals, families and businesses in the form of insurance for home, auto, life, health and valuables.
The combined company will have a more diversified portfolio with approximately $2.2 billion in nonstandard auto insurance premiums, an expanded customer reach through deeper agency relationships and greater efficiencies, according to the press release.
The deal will leverage platforms, analytical capabilities and demographic insights to provide a unique set of products to our policyholders, while promoting growth of the business. It will provide a more diversified suite of products across auto, home, life, and health insurance provides customers with greater choice at more competitive prices.
The transaction is expected to result in annual pre-tax cost savings of approximately $55 million, and an additional $5 to $10 million of pre-tax earnings resulting from the repositioning of Infinity’s investment portfolio. These are expected to be fully phased in by the end of the second year following close. These cost savings are expected to be achieved through the consolidation of redundant corporate functions and the optimization of the combined company’s systems, business processes and reinsurance programs.
Upon completion of the transaction, Infinity’s senior management team will be integrated into the newly-combined organization. Additionally, at closing, Kemper will increase its current board of directors by one seat and select a director from Infinity to join the Kemper board of directors.
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