American Family Insurance acquires direct property insurer, Homesite Group,
Addition will complement strong American Family agent system
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
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
“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
“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:
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
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
American Family Insurance
Media Relations Manager
(608) 242-4100, ext. 32121
American Family Insurance
Media Relations Director
(608) 242-4100, ext. 30680
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