Liberty Mutual to buy Columbus-based State Auto Financial

One of Columbus' longtime insurance companies is getting a new owner as consolidation in the industry continues.

State Auto Financial said Monday that it is being bought by Boston-based Liberty Mutual in a $1 billion deal being pitched as a way to help Liberty expand its offerings for small commercial insurance and consumers.

Liberty Mutual is buying State Auto for $52 per share, or about triple its closing price of $17.26 on Friday. 

State Auto said it doesn't expect the deal to result in any staff reductions.

"Liberty Mutual looks forward to welcoming more than 2,000 State Auto associates to their team once the acquisition is approved and closed," State Auto spokesman Kyle Anderson said. "Liberty Mutual has a long history of strategic acquisitions and successfully integrating those companies to optimize the value for Liberty Mutual and our customers and distribution partners."

Liberty Mutual has committed to operating out of State Auto’s headquarters at 518 E. Broad St. for at least two years after the transaction closes and will explore establishing Columbus as a Midwest regional hub. Liberty Mutual also has also committed to maintaining the company’s philanthropic and charitable efforts for a period of time following the acquisition.

LaRocco's contract with State Auto runs through the end of 2022.

In terms of the annual Christmas nativity scene that the company sets up along East Broad, State Auto says that will be addressed down the road.

Liberty Mutual is one of the biggest insurers nationwide and Ohio.

"Their piece of the pie is going to go up," said Dean Fadel, president of the Ohio Insurance Institute, an industry group.

Liberty Mutual is the third largest homeowner insurer in Ohio with an 8.5% share of the market, according to 2019 data from the Ohio Department of Insurance. It is the No. 7 auto insurer with a 4.6% share of the market.

Nationally, it is the fourth biggest home insurer with a 6.3% share in 2020, according to the Insurance Information Institute, an industry group. It is the sixth-biggest auto insurer with 4.7% of the market.

“The opportunity to join the Liberty Mutual organization is a direct result of the incredible work of the State Auto team, beginning with the transformation of our business and culture that began in 2015,” State Auto President and CEO Mike LaRocco said in a statement. “We’ve become a digital provider of auto, home and business insurance while remaining fully committed to the independent agency system, as we’ve been since our founding 100 years ago."

Through the deal, Liberty Mutual will add $2.3 billion in premium and State Auto’s network of about 3,400 independent agencies across 33 states.

“State Auto Group’s capabilities and product expertise are an ideal complement to Liberty Mutual’s domestic personal lines and small commercial business, and we welcome 2,000 talented associates to our family,” Liberty Mutual Chairman and Chief Executive Officer David Long said in a statement.

Liberty Mutual distributes its Safeco Insurance personal auto, homeowners and specialty products plus Liberty Mutual small business insurance through more than 10,000 independent agencies countrywide.

It is the third big deal this year in the Columbus insurance industry.

Allstate bought Safe Auto last month in a $300 million deal. In January, American Family Insurance bought insurance technology startup Bold Penguin. Terms of that deal weren't disclosed.

Fadel said he wouldn't be surprised to see more deals involving Ohio carriers, especially among smaller, mid-sized companies, as the industry continues to consolidate.

"It reflects on the market in Ohio," he said. "We have a robust domestic industry." 

Liberty Mutual, known for its LiMu Emu and Doug commercials, expects to close on the deal in 2022.

Fadel credited LaRocco with turning around State Auto since he took over in 2015. 

"He’s done a tremendous job in transforming this company, especially on the technology side," Fadel said.

mawilliams@dispatch.com

@BizMarkWilliams