Liberty Mutual Buying Safeco for $6.2 Billion
Boston-based Liberty Mutual Group announced today it is buying Safeco Corporation of Seattle for $6.2 billion and, as a result, will be the nation's fifth-largest property/casualty insurer. Obtaining a solid foothold in the West Coast market was apparently a prime reason for Liberty Mutual to offer $68.25 cash per share, which is a premium of about 51 percent above the price of Safeco's common stock before it skyrocketed today on the news.
Boards of both companies have approved the deal, which is subject to approval by Safeco's shareholders, they said. The transaction is expected to close by the end of the third quarter of 2008. Liberty Mutual already is the sixth-largest property and casualty insurer in the United States based on its 2007 direct written premium of $20.2 billion; Safeco had 2007 direct written premium of $5.9 billion, according to Liberty Mutual's announcement. Safeco will become part of Liberty Mutual Group's Agency Markets business unit once the acquisition is completed.
"The addition of Safeco significantly expands and strengthens the Liberty Mutual Group," said Edmund F. Kelly, Liberty Mutual Group's chairman, president, CEO. "Safeco's operations and product mix complement our existing Agency Markets operations. Additionally, both organizations have superb Surety businesses which, when combined, will form the second largest Surety business in the United States." Safeco President/CEO Paula Reynolds said, "This is the opportunity to take West Coast inventiveness and launch it with a global brand at a substantial premium to Safeco shareholders."