Liberty Mutual Selling Workers’ Comp Unit Summit Southeast to American Financial

Liberty Mutual Insurance said it has agreed to sell Summit Holdings Southeast Inc. and its related companies to American Financial Group (AFG) in an all-cash transaction valued at $250 million.

Based in Lakeland, Florida, Summit sells workers’ compensation in the Southeast and has approximately $520 million of premium written.

Following the transaction, Summit will continue to operate under the Summit brand as a member of AFG’s Great American Insurance Group, according to the announcement.

Under the terms of the transaction, Cincinnati-based AFG will pay Liberty Mutual an estimated $250 million at closing. The purchase price will be subject to adjustment between signing and closing for, among other things, changes in Summit’s GAAP tangible book value.

Summit’s affiliates include:

• Bridgefield Casualty Insurance Co.: Does business in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
• Bridgefield Employers Insurance Co.: Sells in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

Following the announcement, rating agency A.M. Best issued a comment saying that AFG’s total capital investment in Summit will be approximately $400 million, including the capital contribution at closing.

A.M. Best Co. said the issuer credit rating (ICR) of “bbb+” and all debt ratings of AFG are unchanged. In addition, A.M. Best said the financial strength rating of A (Excellent) and ICRs of “a” of Summit’s insurance subsidiaries — Bridgefield Employers Insurance and Bridgefield Casualty Insurance Co. — also are unchanged.

The rating agency said the transaction has no effect on AFG’s financial leverage measures as no external financing is utilized. AFG’s total debt-to-total capital and interest coverage ratios remain within A.M. Best’s guidelines for its current ratings. AFG has no material debt maturing until 2019, further benefiting its liquidity position, according to A.M. Best.

Through its Great American Insurance Group, AFG sells specialized commercial property/casualty insurance products as well as annuities. Its major product lines include inland and ocean marine, workers’ compensation, agricultural-related products including crop insurance, executive and professional liability, fidelity and surety, collateral protection, umbrella and excess liability, excess and surplus and commercial automobile. The group writes business in all 50 states primarily through independent agents and brokers.

Bank of America Merrill Lynch acted as financial advisor to Liberty Mutual Insurance.