(Bloomberg) — Progressive Corp., the fourth-largest U.S. auto insurer, is expanding in home coverage to challenge rivals including Allstate Corp. that are better known for bundling different types of policies.
Progressive agreed to pay $875 million for a majority stake in ARX Holding Corp., bringing its ownership of the firm to 67% from 5%, the Mayfield Village, Ohio-based company said today in a statement. ARX was the No. 18 U.S. seller of homeowners' coverage last year.
The buyer, known for spunky spokeswoman Flo, is seeking to compete with rivals that sell auto and home policies together. Allstate, which sells policies through agents, purchased online car-insurance seller Esurance in 2011 in a challenge to Progressive's business, and said it would offer home policies as well.
“Progressive is committed to becoming the insurance destination brand for consumers,” Chief Executive Officer Glenn Renwick said in the statement. “As such, we need the reliable availability of many more products than we intend to manufacture.”
Renwick's company slipped 2.2% to $25.67 at 9:47 a.m., erasing most of shareholders' returns for the year. That compares with gains of more than 20% at Northbrook, Illinois-based Allstate and at Berkshire Hathaway Inc., parent of online car insurance seller Geico.
XL Group Plc is selling its 40% stake in ARX as part of the transaction, the Dublin-based insurer said today in a regulatory filing. XL will receive gross proceeds of about $500 million, the company said.
Expansion Plans
ARX's American Strategic Insurance offers coverage in 26 states and Washington D.C., and plans to add locations next year. Progressive said the deal announced today is expected to be completed by April 1, and that it intends to purchase the rest of ARX over the next six years.
Progressive said American Strategic will operate as a separate company with its current management team. American Strategic also offers commercial property insurance, personal umbrella policies, and flood coverage.
“Our intention has long been to become the Progressive of home insurance,” American Strategic CEO John Auer said in the statement. The deal “creates a predictable and stable long-term outlook.”
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
