Teaming up
Liberty Mutual will acquire Safeco
By Elisabeth Boone, CPCU
In its latest move to expand its national network of regional carriers, the Liberty Mutual Group in late April announced a definitive agreement to acquire Safeco Corporation in a transaction valued at approximately $6.2 billion.
Upon completion of the transaction, which is expected to close by the end of the third quarter of 2008, Liberty Mutual will become the fifth largest property/casualty insurer in the United States, moving up from its current position as sixth largest.
After the transaction, Safeco will become part of Liberty Mutual Agency Markets. The combined organization will have revenue of almost $12 billion and will be represented by about 15,000 independent agents nationwide.
In an exclusive interview with Rough Notes, Gary Gregg, president of Liberty Mutual Agency Markets, talked about the factors that made the acquisition of Safeco attractive to Liberty Mutual and about the synergies he sees between the two organizations.
Gregg first addressed the acquisition from the standpoint of geography. “Safeco is strong in the East, but it’s very strong in the West, whereas the opposite is true for Liberty Mutual,” he said. “When we put together our companies’ depth of market share by state and our respective operating strengths, we’ll build a stronger platform throughout the country.”
Another factor that made the transaction attractive, Gregg said, is the complementary mix of business between Safeco and Liberty Mutual. “Safeco historically has been very strong in personal lines in its geographic territory; we’re predominantly commercial lines, so together we’ll have a great mix of business,” he commented.
On another front, Gregg noted that the combination of Safeco and Liberty Mutual will create a surety powerhouse that will rank as the second largest surety business in the United States.
Last year Liberty Mutual acquired Ohio Casualty Corporation, the parent of Ohio Casualty Insurance and five other property/casualty carriers, in a deal valued at approximately $2.7 billion. The Safeco transaction represents Liberty Mutual’s second acquisition of a national insurer as opposed to the regional companies that had comprised Liberty Mutual Agency Markets. We asked Gregg if this represents a strategic shift in Liberty Mutual’s efforts to expand its national/regional base.
“In the process of integrating Ohio Casualty into Liberty Mutual, we created a new Ohio Casualty that is a regional carrier operating in eight jurisdictions: Delaware, Kentucky, Ohio, Pennsylvania, Maryland, Virginia, Washington, D.C., and West Virginia,” Gregg said.
Whether the remaking of Ohio Casualty into a regional insurer will serve as a model for the Safeco acquisition remains to be seen, Gregg said. “Now that we’ve announced the transaction, it will be essential for our success to bring the two senior management teams together and do a comprehensive strategic review to determine how best to leverage our combined strengths and maximize the value of the acquisition to our agents and, obviously, to us.” *