American Family Insurance Mutual Holding Company, a Wisconsin-based property and casualty (P&C) insurance group, has entered an agreement to acquire Ameriprise Auto & Home (AAH) from its parent, Ameriprise Financial, for $1.05 billion.
Based in De Pere, Wisconsin, AAH is a P&C insurance provider that primarily sells its products through a partnership with wholesale retailer Costco.
Following the transaction, AAH will become a subsidiary within the American Family Insurance group and operate under its existing name until a new brand is identified and approved by regulators.
It’s planned that all AAH employees will be retained and report to the subsidiary, while current AAH customers will retain their policies with no change in coverage or service.
The deal is expected to close during the second half of 2019, pending regulatory approval and satisfaction of other customary closing conditions.
American Family explained that the acquisition would broaden its business on a geographic basis, spreading out storm risk and further strengthening the company’s financial position.
“This is about serving more customers through channels they prefer, and strengthening our ability to protect them,” said Jack Salzwedel, Chair and Chief Executive Officer (CEO) of American Family.
“American Family exclusive agents continue to have great success,” he continued. “Our direct-channel companies are growing. And last year, we merged with a company that offers products through independent agents.”
“With this acquisition, we expand our efforts to reach customers who prefer to acquire insurance through relationships they have with other entities,” Salzwedel said.
“By doing this and continuing to grow in our other channels, we build scale, capabilities and financial strength to provide greater value to our customers.”
Approximately 70% of AAH’s premium comes from auto insurance sales, but the company is also active in homeowners, renters, umbrella, and some specialty insurance lines.
It reported 2018 results of $789 million in surplus, $1.8 billion in assets and $1.1 billion of annual direct premium written, and employs 1,800 people.
“We are proud of the exceptional value and award-winning service we’ve provided to Auto & Home policyholders over the last several decades and we sincerely thank each and every employee for their dedication and contributions,” said Jim Cracchiolo, Chairman and CEO of Ameriprise Financial.
“We are pleased to reach this agreement and feel confident that we will be leaving the business in good stead given American Family Insurance’s financial strength and reputation for quality products and customer care,” he added.