Madison-based American Family Insurance announced it has reached agreement to acquire direct homeowners insurer Homesite Group Inc.
The acquisition of Homesite, based in Boston and a leading direct writer of homeowners, renters and condominium insurance, will be finalized by the end of the year, pending regulatory approval. American Family is acquiring Homesite for an anticipated $616 million.
The move strengthens American Family’s position in the marketplace by complementing its exclusive agent network with direct channel options to serve a different customer segment. Agents will remain the company’s primary distribution channel, said Jack Salzwedel, American Family chairman and chief executive officer.
“This is about meeting customer preferences,” Salzwedel said. “At American Family, we already have exceptional agents for customers who value the expertise and close personal attention our agents provide. Our agents are American Family’s foundation, and they will continue to be. Homesite allows us to serve a different segment of customers who want to use direct channels to handle their insurance needs. We want to provide options for all customer preferences.”
The purchase is the second time in less than a year that American Family has acquired a direct property-casualty insurance company. American Family purchased non-standard auto insurer Permanent General Companies at the end of 2012.
Homesite is privately owned by multiple entities and individuals. Owners include Alleghany Corp., Metalmark Capital through its management of the Morgan Stanley Capital Partners funds and The Plymouth Rock Company Inc.
Dan Schultz, American Family president and chief operating officer, said the Homesite purchase gives American Family additional benefits by increasing and diversifying its share of the property insurance market.
“Our plan is for Homesite to operate as a separate and distinct entity, including maintaining its current operations and business partner relationships,” Schultz said. “Long term, we’ll identify opportunities to learn and capitalize on each other’s strengths for the benefit of our customers.”
