Hallmark Financial Services has executed an agreement for its wholly-owned subsidiary, Hallmark Insurance Company, to acquire State Auto National Insurance Company from State Auto Financial Corporation.
The purchase price for the acquisition will be $14m cash at closing plus an earn-out of up to $2m. Hallmark expects to fund the acquisition out of working capital.
In connection with the closing, State Auto National will enter into reinsurance agreements with an affiliate of the seller pursuant to which the affiliate will handle all claims and assume all liabilities arising under policies issued by State Auto National prior to the closing and during a transition period of up to six months following the closing.
Mark Morrison, president and CEO of Hallmark, said: “The purchase of State Auto National Insurance Company as a clean statutory entity, along with the policy renewals of its existing book of non-standard personal automobile business, will significantly expand our Personal Lines business unit into new states through an already existing agency distribution.
“The structure of the transaction allows us to realize immediately the benefit of our highly efficient personal lines platform that is tailor-made to meet the needs of the non-standard personal auto marketplace.”