State Farm® to Acquire GAINSCO
In September, State Farm Mutual Automobile Insurance Company announced an agreement to acquire non-standard auto insurer GAINSCO for approximately $400 million in cash.
The transaction closed on Dec. 31.
The closing finalizes the first acquisition of an insurance company by State Farm in the company’s 98-year history.
In the future, the companies expect to provide State Farm independent contractor agents an opportunity to market, solicit and service GAINSCO products.
State Farm Mutual Automobile Insurance Company, America’s largest property and casualty insurance provider, and GAINSCO, Inc. announced Sept. 17, 2020, that they have entered into an agreement pursuant to which State Farm will acquire GAINSCO for approximately $400 million in cash.
The transaction is expected to close in early 2021, subject to approval by GAINSCO’s shareholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, obtaining regulatory approvals, and satisfaction of other customary closing conditions.
GAINSCO concentrates on the non-standard personal automobile insurance market, specializing in minimum-limits personal auto insurance.
The transaction is the first acquisition of an insurance company by State Farm in its 98-year history.
“We believe this acquisition positions both our company and GAINSCO well for future growth,” said Michael Tipsord, State Farm President, Chairman, and CEO. “Because of our competitive value, broad line of products, and exceptional customer service from our employees and 19,200 State Farm independent contractor agents, customers have made us the largest property and casualty insurer for several decades. We are excited for the opportunity State Farm agents will have to serve a market that has historically not been open to them. This will help us further toward our goal of serving more customers in more ways.”
“This transaction creates value for GAINSCO’s shareholders and is especially opportunistic for our GAINSCO team, agency base, policyholders and plans for future growth." said GAINSCO Executive Chairman Bob Stallings. He added, “GAINSCO is a leading provider of non-standard auto insurance products in the markets we serve and we look forward to partnering with State Farm, its agent network and our existing agency channels to achieve our mission of becoming a nationwide leader in the fastest growing segment of the auto insurance market."
“State Farm has an extraordinary market reputation and a highly capable independent contractor agency system,” said GAINSCO CEO Glenn Anderson. “GAINSCO looks forward to providing our very successful minimum limits auto insurance program to State Farm agents in the future, while continuing to partner with our own outstanding agency system as we expand across the country. We are excited that, in joining forces with State Farm, we will accelerate our long term mission to become the best nationwide non-standard personal auto insurer in the industry.”
Under the definitive merger agreement, upon closing State Farm Mutual will acquire 100% of the stock in GAINSCO, Inc., the holding company of MGA Insurance Company, Inc., a Texas-domiciled insurance company, and GAINSCO shareholders will receive approximately $107.38 per share in cash. GAINSCO will continue to operate as a separate company and brand with continued focus on its current objectives. Over time, the parties expect to provide State Farm agents the opportunity to distribute GAINSCO products in addition to State Farm products and services.
Barclays Capital Inc. was the financial adviser to State Farm, and Mayer Brown LLP served as legal counsel for State Farm. Sherman & Company was the financial adviser to GAINSCO, and Hunton Andrews Kurth LLP served as legal counsel for GAINSCO.
For 100 years, the mission of State Farm has been and continues to be to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams. State Farm and its affiliates are the largest providers of auto and home insurance in the United States. Its more than 19,400 agents and approximately 53,400 employees serve over 87 million policies and accounts – which includes auto, fire, life, health, commercial policies and financial services accounts. Commercial auto insurance, along with coverage for renters, business owners, boats and motorcycles, is available. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 42 on the 2022 Fortune 500 list of largest companies. For more information, please visit http://www.statefarm.com.
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