National General Holdings Corp. will pay $165 million for a Tennessee-based property/casualty insurer focused on nonstandard auto business.
The New York City-based specialty insurance holding company is snatching up Elara Holdings Inc., the parent of Direct General Corp., which does business in the Southeast United States.
National General is expected to close its purchase in the 2016 fourth quarter, pending regulatory approvals and other closing conditions. The final price could also change a bit due to post-closing adjustments.
National General CEO Barry Karfunkel said that acquiring Direct General helps grow its personal lines portfolio and boost its direct marketing abilities.
“This acquisition adds a company that is well known as a direct marketing nonstandard auto leader in the Southeastern U.S. and has a track record of strong growth, which will enable us to expand our product distribution channel,” Karfunkel said in prepared remarks.
As well, Karfunkel said, National General should gain substantially from transitioning Direct General to its “state-of-the-art technology system, advanced pricing analytics [and] comprehensive reinsurance structure.”
With that in mind, the acquisition should be immediately accretive to earnings, he said.
Direct General, founded in 1991, has about 1,800 employees and wrote $483 million of net written premium in 2015. Of that total, $464 million was in nonstandard auto and $19 million came from term-life products.
National General traces its roots to 1939.
Source: National General