US property insurer Liberty Mutual to buy Safeco for $6.2 bn
Liberty Mutual Group, the sixth-largest US property and casualty insurer, agreed to buy Safeco for about $6.2 billion, the industry’s biggest transaction in four years.
By Bloomberg |
NEW YORK: Liberty Mutual Group, the sixth-largest US property and casualty insurer, agreed to buy Safeco for about $6.2 billion, the industry���s biggest transaction in four years.
Liberty Mutual will pay $68.25 a share in cash for Safeco, 51% more than yesterday���s closing price. The combination will create the fifth-largest US property and casualty insurer, the companies said today in a statement.
Safeco���s sale may signal the start of an industry consolidation predicted on April 14 by Accenture after insurance stocks fell 15% in the first quarter. The Seattle-based insurer���s auto unit posted a loss at the end of 2007 because of rising medical claims and repair costs, leading to a 33% decline in fourth-quarter profit. Safeco lost 19% in New York trading this year through yesterday.
���The addition of Safeco significantly expands and strengthens,��� Liberty Mutual, Ted Kelly, chief executive officer of the Boston-based insurer, said in the statement.
The sale is the biggest US property and casualty insurance transaction since St Paul and Travelers Property Casualty combined in 2004 in a $17.9 billion merger. Safeco CEO Paula Rosput Reynolds had called the last three months of 2007 ���a quarter we wouldn���t want to repeat.���
Safeco climbed $20.90, or 46% to $66.13 in New York Stock Exchange composite trading.
Liberty Mutual will add automobile, home and business customers in most US states, including those on the West Coast where Safeco has its greatest market share. The purchase is expected to be completed by the end of the third quarter. Liberty Mutual is owned by its policyholders. Both companies sell coverage through independent agents.
About 71% of analysts tracking insurers of homes, cars and businesses expect a ���significant increase��� in mergers in 2008, Accenture said in its report. Accenture interviewed 108 stock analysts in December and January.
���In troubled times, companies that can afford it try to pick up deals,��� John Del Santo, director of Accenture���s North American insurance practice, said in an interview earlier this month. ���We���ve seen a lot of discussion activity at a lot of different companies.���
Liberty Mutual last year purchased competitor Ohio Casualty for $2.7 billion to boost sales through independent agents.
Contracts on Safeco fell 7 basis points to 55 basis points, CMA data show. A decline signals improvement in investor perceptions of creditworthiness.
Liberty Mutual will pay $68.25 a share in cash for Safeco, 51% more than yesterday���s closing price. The combination will create the fifth-largest US property and casualty insurer, the companies said today in a statement.
Safeco���s sale may signal the start of an industry consolidation predicted on April 14 by Accenture after insurance stocks fell 15% in the first quarter. The Seattle-based insurer���s auto unit posted a loss at the end of 2007 because of rising medical claims and repair costs, leading to a 33% decline in fourth-quarter profit. Safeco lost 19% in New York trading this year through yesterday.
���The addition of Safeco significantly expands and strengthens,��� Liberty Mutual, Ted Kelly, chief executive officer of the Boston-based insurer, said in the statement.
The sale is the biggest US property and casualty insurance transaction since St Paul and Travelers Property Casualty combined in 2004 in a $17.9 billion merger. Safeco CEO Paula Rosput Reynolds had called the last three months of 2007 ���a quarter we wouldn���t want to repeat.���
Safeco climbed $20.90, or 46% to $66.13 in New York Stock Exchange composite trading.
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Liberty Mutual will add automobile, home and business customers in most US states, including those on the West Coast where Safeco has its greatest market share. The purchase is expected to be completed by the end of the third quarter. Liberty Mutual is owned by its policyholders. Both companies sell coverage through independent agents.
About 71% of analysts tracking insurers of homes, cars and businesses expect a ���significant increase��� in mergers in 2008, Accenture said in its report. Accenture interviewed 108 stock analysts in December and January.
���In troubled times, companies that can afford it try to pick up deals,��� John Del Santo, director of Accenture���s North American insurance practice, said in an interview earlier this month. ���We���ve seen a lot of discussion activity at a lot of different companies.���
Liberty Mutual last year purchased competitor Ohio Casualty for $2.7 billion to boost sales through independent agents.
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Credit-default swaps tied to Liberty Mutual Group climbed 15 basis points to 110 basis points, the most since March 13, according to London-based CMA Datavision. An increase in the five-year contracts, used to speculate on the company���s ability to repay its debt or to hedge against losses, signals deterioration in investor confidence. Contracts on Safeco fell 7 basis points to 55 basis points, CMA data show. A decline signals improvement in investor perceptions of creditworthiness.
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Lehman Brothers Holdings advised Liberty Mutual. Safeco was advised by Morgan Stanley.Download
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