Boston and Seattle —
The boards of directors of both companies approved the proposed transaction, which is valued at approximately $6.2 billion. It is subject to approval by Safeco’s shareholders as well as the customary regulatory approvals and conditions. The transaction is expected to close by the end of the third quarter of 2008, and is not subject to financing contingencies.
Upon completion of the transaction, Liberty Mutual will become the fifth-largest property/casualty insurer in the United States. Currently, Liberty Mutual Group is the sixth-largest property/casualty insurer in the United States based on the company’s 2007 direct written premium of $20.2 billion, while Safeco had 2007 direct written premium of $5.9 billion.
Following the transaction, Safeco will become part of Liberty Mutual Group’s Agency Markets business unit. Liberty Mutual Agency Markets had revenues of $5.6 billion in 2007. Combined, the organization will have about 15,000 independent agencies.
“The addition of Safeco significantly expands and strengthens the Liberty Mutual Group,” says Edmund Kelly, Liberty Mutual Group chairman, president and CEO. “Safeco’s operations and product mix complement our existing Agency Markets operations. Additionally, both organizations have superb Surety businesses, which, when combined, will form the second largest Surety business in the United States.”
“This is the opportunity to take West Coast inventiveness and launch it with a global brand at a substantial premium to Safeco shareholders,” says Safeco president and CEO Paula Reynolds.
Gary Gregg, president of Liberty Mutual Agency Markets, says, “Safeco is an excellent addition to Liberty Mutual Agency Markets, and I look forward to working with the Safeco leadership team to deliver even greater value to our independent agent partners. With revenue approaching $12 billion, Agency Markets will rank third in personal and fifth in commercial property/casualty products distributed through independent agents in the United States. Just as important, we share Safeco’s commitment to employees, customers, agents and the communities in which we do business.”
In light of the proposed transaction, Safeco has postponed its previously scheduled annual meeting of shareholders, which was to take place May 7, 2008. Safeco will provide information on the timing of the annual and special shareholder meeting to approve the transaction when available.
Morgan Stanley & Co. Inc. and Skadden, Arps, Slate, Meagher & Flom LLP have advised Safeco in connection with this transaction.
Source: Liberty Mutual Group
