American Family Insurance has reached agreement to acquire PGC Holdings Corp. (Permanent General Companies) and its subsidiaries, including non- standard auto insurers Permanent General and The General.
Like this article? Sign up to receive our weekly news blasts here.The agreement was announced Sept. 25 by American Family and Capital Z Partners, majority owner of PGC Holdings Corp. Closing of the anticipated $239 million transaction is targeted for later this year, subject to regulatory approval.
"American Family Insurance will grow by reaching out to customers in new states and new markets, and also by strengthening our appeal to customers in our existing states," said Jack Salzwedel, American Family chairman and chief executive officer.
"This acquisition expands our holdings to include a company with different capabilities that also operates in some states we don't currently serve. It also provides American Family an opportunity to learn from a company with successful experience in direct insurance sales."
PGC Holdings, also known as Permanent General Companies, will remain a completely separate brand from American Family and will continue to operate as a separate entity. Employee positions will be retained, and Randy Parker will continue in his role as Permanent General's chief executive officer.
"This is an exciting day for PGC and our associates," Parker said. "We are looking forward to the opportunities and potential growth that can be achieved by aligning with a company that is financially strong, service-driven and focused on providing outstanding value to its customers. We feel strongly that it's the right time and right company for PGC to partner with as we continue to expand our national presence."
Based in Madison, Wis., American Family is one of the country's largest property-casualty mutual insurance companies, with annual direct written premium of $5.4 billion. The multi-line company sells auto, home, business, farm/ranch and life insurance in 19 states through its network of 3,500 agents, who sell American Family products only. A small percentage of policies are sold through the company's web site, www.amfam.com, and sales call centers.
Based in Nashville, Tenn., Permanent General, www.pgac.com, specializes in serving the non-standard auto insurance market through its subsidiaries, Permanent General and The General, www.thegeneral.com.
"The non-standard auto market is big, growing and largely untapped for American Family," said Dan Schultz, president and chief operating officer. "We will also learn a great deal from Permanent General about direct distribution, which is essential because we must reach those customers who want to deal with us through different channels for some of our products."
Schultz said American Family agents will continue to be the heart of the company's distribution system, and will still be the exclusive agent sellers of American Family products. Independent agents who sell Permanent General products will not sell American Family products.
"Our customers tell us loud and clear that they value their agents for their personal attention and trusted advice on insurance issues," Schultz said.
"It is a bittersweet day for the Cap Z family," said Brad Cooper, managing partner of Capital Z Partners. "While we are happy with the outcome of the investment, we are sad to put an end to this eight- year relationship. We partnered with Randy Parker and his incredible management team and built a top notch brand in the insurance space. We are very pleased that PGC is being acquired by a company with similar qualities, values and goals, which will help PGC continue to grow and succeed."
Willis Capital Markets & Advisory acted as exclusive financial advisor to Permanent General Companies. Goldman, Sachs and Co. acted as exclusive financial advisor to American Family.
In a separate transaction, American Family is moving forward with an agreement to purchase Lumbermens Casualty Insurance Company (LCIC). LCIC is a subsidiary of Illinois-based Lumbermens Mutual Casualty Company.
The purchase gives American Family the flexibility to expand into other states in the future. LCIC stopped selling and renewing insurance policies in 2003 and is a shell company. LCIC has property and casualty licenses (auto, homeowners and umbrella) in approximately 40 states. Lumbermens Mutual was placed in rehabilitation by order of an Illinois Circuit Court on July 2, 2012. The sale of LCIC to American Family was recently approved by the same court. The sale is scheduled to be finalized on Oct. 1.
For further information, see www.capitalz.com.
