American Family enterprise adds customers, spreads storm risk with acquisition of Ameriprise Auto & Home
Already strong in agent and direct channels, enterprise expands distribution of products
American Family Insurance reached agreement to acquire Ameriprise Auto & Home, a De Pere, Wisconsin-based property-casualty insurance provider that primarily sells its products through partnerships.
Madison, Wisconsin-based American Family Insurance Mutual Holding Company (American Family Insurance) announced today it has reached agreement to acquire Ameriprise Auto & Home (AAH), a De Pere, Wisconsin-based property-casualty insurance provider that primarily sells its products through a partnership with wholesale retailer Costco.
(Update: In August 2020 the company was renamed CONNECT, powered by American Family Insurance)
The acquisition of Ameriprise Auto & Home, a business unit of Ameriprise Financial, is expected to close during the second half of 2019, pending regulatory approval and satisfaction of other customary closing conditions. American Family Insurance group is acquiring Ameriprise Auto & Home for approximately $1.05 billion, subject to certain post-closing financial adjustments.
Why is American Family making this acquisition?
The acquisition continues American Family’s strategy to complement its exclusive agents with distribution channels for customers who prefer to handle their insurance matters in different ways. The acquisition also broadens American Family’s business on a geographic basis, which spreads out storm risk and helps further strengthen the company’s financial position.
“This is about serving more customers through channels they prefer, and strengthening our ability to protect them,” said Jack Salzwedel, American Family chair and chief executive officer.
“American Family exclusive agents continue to have great success. Our direct-channel companies are growing. And last year, we merged with a company that offers products through independent agents.”
“With this acquisition, we expand our efforts to reach customers who prefer to acquire insurance through relationships they have with other entities. By doing this and continuing to grow in our other channels, we build scale, capabilities and financial strength to provide greater value to our customers,” Salzwedel said.
Bringing the companies together
The acquisition brings together two Wisconsin companies with similar cultures, values and customer focus. “We know each other very well, with a fair number of employees who have worked at both companies,” Salzwedel said. “There are similarities between the companies, but also unique strengths and perspectives we can use to grow and improve the business.”
American Family Insurance is a multi-line mutual insurance group. It serves customers in 19 states through its American Family agents, and nationally through subsidiaries that sell products through the internet, call centers, affinity partners and independent agents.
The group reported 2018 results of $9 billion in equity, $27.5 billion in assets and $9.6 billion of direct premium written. The group employs 12,000 people through its various companies, with American Family-brand products sold through 2,500 independent contractor exclusive agents.
Ameriprise Auto & Home sells its products – auto, homeowners, renters, umbrella and some specialty insurance lines – in 43 states and District of Columbia through partners. It reported 2018 results of $789 million in surplus, $1.8 billion in assets and $1.1 billion of annual direct premium written. Approximately 70 percent of its premium is from auto insurance sales. AAH employs 1,800 people.
“We are proud of the exceptional value and award-winning service we’ve provided to Auto & Home policyholders over the last several decades and we sincerely thank each and every employee for their dedication and contributions,” said Jim Cracchiolo, chairman and CEO of Ameriprise Financial. “We are pleased to reach this agreement and feel confident that we will be leaving the business in good stead given American Family Insurance’s financial strength and reputation for quality products and customer care.”
Ameriprise Auto & Home makes a significant majority of it sales through a partnership with Costco, which offers Ameriprise Auto & Home policies to its members through its website. American Family and Costco have entered into a Letter of Intent to continue that partnership.
Ameriprise Auto & Home also sells its products through referrals from Ameriprise Financial advisors. That relationship will continue after the acquisition.
Continuing a tradition of successful acquisitions
This transaction continues a history of successful mergers and acquisitions.
In 2012, American Family acquired direct non-standard auto insurer Permanent General Companies (The General) and the former Lumbermens Casualty Insurance Company, which was renamed Midvale Indemnity Company.
In 2013, American Family acquired direct homeowners provider Homesite Group, and launched AssureStart, a managing general agent that sells commercial insurance online to small businesses, and is the commercial technology platform for American Family agents. AssureStart policies are underwritten by Midvale.
American Family group continued its expansion when it converted to a mutual holding company in 2017, allowing it to merge with Main Street America, another mutual holding company, a year later. Main Street America, which specializes in commercial insurance and surety bonds but also sells property and auto insurance, distributes its products through independent agents.
The acquisition of Ameriprise Auto & Home further diversifies American Family’s storm loss risk by reducing the group’s premium concentration in hail- and tornado-prone states. While the merger with Main Street America diversified catastrophe risk with its customer concentration on the East Coast, the majority of Ameriprise Auto & Home’s business is in western states.
American Family looks forward to California
Ameriprise Auto & Home’s largest premium state is California, where it reported 2017 direct premium written of $377 million. Of that, more than 80 percent is auto premium. This acquisition will provide access to a very large customer base in a state where American Family group does relatively little business today.
“With our proven track record and strong investments in our people, technology and other innovations, we know what it takes be successful in today’s market. We’re confident we can draw on those qualities, while building on Ameriprise Auto & Home’s strengths, to make this new acquisition another high-performing company within our group,” said Salzwedel.
America Family was advised on legal matters by Foley & Lardner and on financial matters by Keefe, Bruyette & Woods, a Stifel Company.
About American Family Insurance
Madison, Wisconsin-based American Family Insurance group is the nation's 13th-largest property/casualty insurance group and ranks No. 311 on the Fortune 500 list. The company sells American Family-brand products, including auto, homeowners, life, business and farm/ranch insurance, primarily through its exclusive independent contractor agents in 19 states. American Family affiliates (The General and Homesite) also provide options for consumers who want to manage their insurance matters directly over the internet or by phone. Affiliate Main Street America sells insurance products through independent agents. Web www.amfam.com; Facebook www.facebook.com/amfam; Twitter www.twitter.com/amfam.
About Ameriprise Financial
At Ameriprise Financial, we have been helping people feel confident about their financial future for more than 120 years. With extensive asset management, advisory and insurance capabilities and a nationwide network of approximately 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com.