Insurer Liberty Mutual Group is buying Ohio Casualty Corp. for $2.7 billion. Ohio Casualty Corp. is the holding company of The Ohio Casualty Insurance Company and five other property and casualty insurance companies.
Ohio Casualty shareholders will receive $44 per share, a 32 percent premium over the company's stock price prior to the announcement (the share price increased 29 percent after the announcement). The purchase will increase the number of independent insurance agencies offering Liberty's insurance products to more than 10,000 nationwide.
Liberty hopes to strengthen is relationships with agents in the Northeast and Midwest through the acquisition. The bulk of Ohio Casualty's policies are sold through independent brokers in those regions.
"Under [CEO] Dan Carmichael's leadership, Ohio Casualty has been transformed into a premier regional property and casualty company and is a great fit with our Agency Markets business," says Edmund Kelly, Liberty Mutual Group chairman, president and CEO. "Through the addition of Ohio Casualty, our regional-company independent agency business is significantly stronger and our agency relationships are strengthened. With combined net written premium exceeding $7.3 billion following this transaction, we will become the largest regional provider of property and casualty products distributed through independent agents in the United States."
Following the acquisition, Ohio Casualty will be part of Liberty Mutual Group's Agency Markets business unit. The 11 companies in that unit have more than 6,800 employees and approximately 6,500 appointed agencies. In 2006, Liberty Mutual Agency Markets' net written premium was $5.9 billion. Ohio Casualty, which has approximately 2,100 employees and operations in 48 states, has approximately 3,400 appointed agencies. In 2006, Ohio Casualty's net written premium was $1.4 billion.
Although Liberty operates a direct repair program for collision repair shops, a spokesperson said Ohio Casualty does not currently have a DRP program. The Liberty program is called Total Liberty Care (TLC).
"I am very proud of the accomplishments of our employees, agents and management at Ohio Casualty in creating a leading super-regional property and casualty insurance company," Carmichael said. "We look forward to being an important component of Liberty Mutual Agency Markets' continuing success. We believe this transaction will benefit our key constituents and enable our shareholders to realize significant value for their investment in Ohio Casualty."
