Auto-Owners Insurance, a Lansing, Michigan, based insurance provider, has announced its proposed affiliation with the Concord, N.H., based Concord General Mutual Insurance group of companies.
The transaction has been approved by both Auto-Owners’ and Concord’s boards and is expected to close in the second quarter of 2017 pending regulatory and Concord policyholder approval.
This move will allow Auto-Owners to expand to the four New England states in which Concord operates – New Hampshire, Vermont, Maine and Massachusetts – and grow its offering of commercial and personal lines products through Concord’s network of 500 independent agencies, according to Bill Woodbury, senior vice president, secretary and general counsel of Auto-Owners.
“We were looking for an opportunity to grow,” Woodbury told Insurance Journal. “We are in 26 states, but we’re not in New England. This is going to be a great opportunity for us to get into that market.”
Because mutual companies are owned by policyholders, they can’t be acquired outright, he said. Two mutual companies will instead typically enter into an affiliation in which they work together. In this case, Concord will keep its own name while becoming a member of the Auto-Owners family of companies, he added.
There will be no employee cuts as a result of the transaction, Woodbury said. However, both companies plan to add associates over time, he added.
“Adding Concord and its affiliates to the Auto-Owners family of companies will present tremendous synergies and opportunities for growth on a superior financial platform, providing increased value to agents, customers and our companies,” said Jeff Harrold, Chairman and CEO of Auto-Owners, in a company press release.
As a result of the affiliation agreement, A.M. Best is reviewing with positive implications the financial strength rating of A- (excellent) and the long-term issuer credit ratings of a- of the members of Concord Group Insurance Pool, led by Concord General Mutual Insurance Company, according to a press release issued by A.M. Best.
The review status reflects potential financial and operational benefits that Concord Group could see as a result of affiliating with a larger and higher-rated organization in terms of premium and surplus, the release stated, adding that A.M. Best is monitoring the progress of the transaction and ongoing performance of each rating unit going forward.
Concord is a property and casualty insurer that operates exclusively through independent agents. While Concord currently specializes in personal lines insurance, it will be able to expand its commercial product offerings as a result of the affiliation, according to the Auto-Owners press release.
“We were made aware of the opportunity and pursued it,” Woodbury said. “Concord was looking for a partner, and we were looking for a partner, and the affiliation’s going to be perfect.”
The proposed affiliation follows Auto-Owners’ acquisition of Goldsboro, N.C., based Atlantic Casualty Insurance Co. last summer.
A spokesperson for Concord referred Insurance Journal to Auto-Owners’ press release.