American insurance firm Kemper has signed an agreement to buy Infinity Property and Casualty in a cash and stock deal valued at approximately $1.4bn.
For each share of Infinity common stock, its shareholders will receive $51.60 in cash and 1.2019 Kemper common shares.
After completion of the deal, Infinity shareholders will own nearly 20% of the combined company on a pro forma basis.
Infinity offers auto insurance focused on serving the specialty, nonstandard segment. The company has a workforce of about 2,300 staff, 10,600 independent agents and generated direct written premiums of $1.4bn in 2017.
Kemper noted that the integrated company will have a more diversified portfolio with about $2.2bn in nonstandard auto insurance premiums besides an expanded customer reach through deeper agency relationships.
Kemper president and CEO said: “This compelling transaction combines two well-known brands with complementary strengths and cultures to form a leader in nonstandard auto insurance, and enhances Kemper’s overall growth opportunities, diversification, financial strength, and ability to serve policyholders.
“We look forward to welcoming the Infinity team to the Kemper family and working together to deliver greater choice to our policyholders through an expanded product offering and deeper relationships with our agent networks, while generating strong returns for our shareholders.”
The deal is expected to deliver Kemper approximately $55m in annual pre-tax cost savings besides $5m to $10m of additional pre-tax earnings.
Pending receipt of required regulatory clearances and approvals, the deal is scheduled to be completed during the third quarter of 2018.
Sidley Austin LLP represented Kemper Corporation in its acquisition of publicly-traded Infinity Property and Casualty Corporation.