Liberty Mutual to Acquire State Auto Group

Insurer Liberty Mutual reported that it will acquire State Auto Group, a super-regional insurance holding company headquartered in Columbus, Ohio.

Under the terms of the agreement, State Auto mutual members will become mutual members of Liberty Mutual. Also, Liberty Mutual will acquire all of the publicly held shares of common stock of State Auto Financial for $52 per share in a cash deal of about $1 billion.

The acquisition will expand Liberty Mutual’s already strong position in personal lines and small commercial insurance. It is the sixth largest auto and home insurer in the U.S. Liberty Mutual today distributes Safeco Insurance personal auto, homeowners and specialty products, and Liberty Mutual small business insurance through more than 10,000 independent agencies countrywide.

Through the deal, Liberty Mutual will add $2.3 billion in premium and State Auto’s network of approximately 3,400 independent agencies across 33 states. This will position it to become the second largest carrier in the independent agency distribution channel.

Liberty Mutual offers additional distribution to consumers for its Liberty Mutual-branded products through exclusive agents in local sales offices countrywide, licensed telesales counselors and online.

“State Auto Group’s capabilities and product expertise are an ideal complement to Liberty Mutual’s domestic personal lines and small commercial business, and we welcome 2,000 talented associates to our family,” said Liberty Mutual Chairman and Chief Executive Officer David Long.

“The opportunity to join the Liberty Mutual organization is a direct result of the incredible work of the State Auto team, beginning with the transformation of our business and culture that began in 2015,” said State Auto President and CEO Mike LaRocco. “We’ve become a digital provider of auto, home and business insurance while remaining fully committed to the independent agency system, as we’ve been since our founding 100 years ago.”

LaRocco took over president and CEO of State Auto in May 2015 and has been credited with turning around the super regional carrier that a few years earlier was dealing with rising expenses, shrinking profits and declining business. His contract was extended last July and now runs through the end of 2022.

The transaction has been approved by the State Auto Financial board of directors, as well as the State Auto Mutual board of directors.

The deal is expected to close in 2022, pending State Auto Mutual member approval, State Auto Financial shareholder approval, receipt of required regulatory approvals and other customary closing conditions.

In connection with the merger of State Auto Financial, State Auto Mutual has entered into a voting agreement with Liberty Mutual under which it has agreed to vote its 58.8% interest in State Auto Financial in favor of the merger.

Liberty Mutual acquired Safeco in 2008 and specialty insurer Ironshore in 2017. In 2018, it sold off its life insurance business.