American Family Insurance acquires direct property insurer, Homesite Group, Inc.
American Family Insurance acquires direct property insurer, Homesite Group, Inc. Addition will complement strong American Family agent system Business Wire MADISON, Wis. -- September 4, 2013 Madison, Wis.-based American Family Insurance announced today it has reached agreement to acquire direct homeowners insurer, Homesite Group, Inc. The acquisition of Homesite, based in Boston and a leading direct writer of homeowners, renters and condominium insurance, will be finalized by the end of the year, pending regulatory approval. American Family is acquiring Homesite for an anticipated $616 million. The move strengthens American Family’s position in the marketplace by complementing its strong exclusive agent network with direct channel options to serve a different customer segment. Agents will remain the company’s primary distribution channel, said Jack Salzwedel, American Family chairman and chief executive officer. “This is about meeting customer preferences,” Salzwedel said. “At American Family, we already have exceptional agents for customers who value the expertise and close personal attention our agents provide. Our agents are American Family’s foundation, and they will continue to be. “Homesite allows us to serve a different segment of customers who want to use direct channels to handle their insurance needs. We want to provide options for all customer preferences.” The purchase is the second time in less than a year that American Family has acquired a direct property-casualty insurance company. American Family purchased non-standard auto insurer Permanent General Companies at the end of 2012. Homesite joins the American Family group of companies Homesite is privately owned by multiple entities and individuals. Owners include Alleghany Corporation, Metalmark Capital through its management of the Morgan Stanley Capital Partners funds and The Plymouth Rock Company, Inc. Homesite is a leader in direct-to-consumer homeowners, renters and condominium insurance, using the internet, call centers and technology-enabled platform solutions. Its sales primarily occur through alliances with insurers and other financial services companies. Homesite was founded in 1997 and offers products in 46 states and the District of Columbia. The company is the 24th largest homeowners insurer in the U.S., with 2012 written premium of $548 million. Founded in 1927, mutual insurer American Family operates in 19 states, offering multiline insurance products and annuities through its 3,500 exclusive agents, with some sales through its internet and call centers. The company reported 2012 written premium in all property-casualty insurance lines of $5.6 billion. The company is the country’s 10th largest homeowners provider, with 2012 written premium of nearly $1.59 billion. Purchase provides market and geographic expansion Dan Schultz, American Family president and chief operating officer, said the Homesite purchase gives American Family additional benefits by increasing and diversifying its share of the property insurance market. Schultz noted Homesite sells its products nearly nationally, compared to American Family’s 19 operating states, which includes strong penetration in the Midwest. The larger territory diversifies American Family’s catastrophe risk, an important element of preserving financial strength. Schultz said the acquisition will have no immediate impact on operations or positions at American Family or Homesite. Fabian Fondriest will stay on as Homesite’s chief executive officer, as will other members of the company’s leadership team. “Our plan is for Homesite to operate as a separate and distinct entity, including maintaining its current operations and business partner relationships,” Schultz said. “Long term, we’ll identify opportunities to learn and capitalize on each other’s strengths for the benefit of our customers.” “Joining American Family is a great step for Homesite,” Fondriest said. “Through the commitment and talents of our team, our investors and our partners, we have built Homesite into a leader in the direct-to-consumer homeowners business. Becoming part of American Family will allow us to further expand our partnerships, enhance our sales-and-service platform capabilities and pursue profitable growth opportunities.” KPMG Corporate Finance LLC served as financial advisor and Foley & Lardner as legal advisor to American Family. Lazard Frères & Co. served as financial advisor and Willkie Farr & Gallagher as legal advisor to Homesite. More on American Family: American Family Insurance offers auto insurance, homeowners insurance, life insurance, business and farm/ranch insurance in 19 states. American Family is the nation’s third-largest mutual property/casualty insurance company and ranks 393^rd on the Fortune 500 list. As of June 30, American Family reported assets of $18.3 billion and equity of $6.2 billion. The company employs 7,100 people, and sells its products through 3,500 exclusive independent contractor agents. Web: www.amfam.com; Facebook: www.facebook.com/amfam; Twitter: www.twitter.com/amfam. American Family subsidiary Permanent General Companies operates as a separate entity and brand, serving the non-standard auto insurance market. Permanent General conducts business in 27 states. More on Homesite: Homesite Group offers homeowners, renters and condominium insurance in 46 states. As of June 30, Homesite reported assets of $872 million and equity of $308 million. The company employs 700 people and is headquartered in Boston, Mass. The company has offices in Akron, Ohio, and Phoenix, Ariz., as well as sales and claim staff located throughout the country. Web: www.homesite.com; Facebook: www.facebook.com/homesiteinsurance; Twitter: www.twitter.com/homesite About Alleghany Corporation: Alleghany Corporation (NYSE:Y) creates value through owning and managing operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghany’s property and casualty subsidiaries include: Transatlantic Holdings, Inc., a leading global reinsurer; RSUI Group, Inc., a national underwriter of property and liability specialty insurance coverages; Capitol Transamerica Corporation, an underwriter of small commercial property, casualty and surety insurance coverages; and Pacific Compensation Corporation, an underwriter of workers’ compensation insurance primarily in California. About Metalmark Capital: Metalmark Capital is a leading private equity firm whose principals have a long track record of successful investing in targeted sectors, with particular focus and competence in energy and natural resources, industrials and healthcare. Metalmark Capital seeks to build long-term value through active and supportive partnerships with the companies and management teams in which it invests. Metalmark Capital is currently investing its latest fund with $2.5 billion of committed capital. For more information, please visit www.metalmarkcapital.com. About Plymouth Rock: The Plymouth Rock Group of Companies together write or manage over $1 billion in personal and commercial auto and homeowner's insurance in Massachusetts, New Hampshire, Connecticut and New Jersey. For more information, please contact www.plymouthrock.com. Contact: American Family Insurance Steve Witmer Media Relations Manager (608) 242-4100, ext. 32121 or American Family Insurance Ken Muth Media Relations Director (608) 242-4100, ext. 30680