Kemper Corp. has agreed to pay $370 million in cash for specialty auto insurer American Access Casualty Company and its related captive insurance agency, Newins Insurance Agency Holdings. Driving the deal: Growth potential among Hispanic and other niche markets.
Plans call for closing the M&A transaction by the 2021 first quarter, pending regulatory approval and other closing conditions.
“AAC is a great addition to Kemper’s specialty auto franchise and aligns with our strategic intent to serve growing niche markets with affordable and easy-to-use products,” Duane Sanders, President of Kemper’s P&C Division, said in prepared remarks. “Their distribution capabilities, including strong customer and agent relationships, will expand our geographic footprint and when combined with our financial resources will create increased reach and incremental scale. We look forward to having AAC join the Kemper team.”
The Chicago-based Kemper is a specialty insurer in areas including auto and personal insurance, life and health. Kemper has more than $14.1 billion in assets and services more than 6.3 million policies. More than 30,000 agents and brokers represent Kemper, which has over 9,300 employees, the company said.
AAC, headquartered in Downers Grove, Illinois, provides specialty private passenger auto insurance in Arizona, Illinois, Indiana, Nevada and Texas, Kemper said. AAC wrote over $370 million of direct premiums in 2019 through a network of approximately 500 independent agents and over 110 captive agents. AAC’s multi-channel distribution strategy, agency relationships, and deep ties to the markets it serves—particularly Hispanic communities—have driven strong growth and consistent profitability, the deal announcement noted.
The transaction is expected to be accretive to Kemper’s earnings per share (EPS) and return on tangible common equity in the first year, excluding value of business acquired and one-time items, and result in high single-digit EPS accretion in the second year, excluding restructuring and one-time items. Tangible book value per share is expected to return to pre-transaction levels within the first year following the close of the transaction.