Upon completion of the deal, Gainsco will continue to operate as a separate company and brand, focusing on its on current objectives
State Farm to acquire Texas-based auto insurer. (Credit: State Farm Mutual Automobile Insurance Company.)
State Farm Mutual Automobile Insurance (State Farm), an American property and casualty insurer, has agreed to acquire Gainsco, an auto insurance provider, for nearly $400m in cash.
Established in 1978, Gainsco is a Texas-based insurance company, offering auto insurance, specialising in minimu-limits personal auto coverage and selling nonstandard personal auto products across Arizona, Florida, Georgia, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Ohio, and Alabama.
As part of the merger agreement, State Farm will acquire 100% stake in Gainsco, the parent company of MGA Insurance Company. As per the deal, Gainsco shareholders will receive nearly $107.38 per share in cash.
The deal is expected to close early next year, subject to approval from Gainsco’s shareholders, expiry or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, securing regulatory approvals and completing customary closing conditions.
State Farm president, chairman and CEO Michael Tipsord said: “We believe this acquisition positions both our company and GAINSCO well for future growth.
“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.”
The deal is expected to be completed early next year
After the deal is closed in 2021, Gainsco will continue to operate as a separate company and brand, continuing its focus on current objectives.
Eventually, State Farm expects to provide its agents with the opportunity to distribute Gainsco products in addition to the parent company’s products and services.
GAINSCO executive chairman Bob Stallings said: “This transaction creates value for GAINSCO’s shareholders and is especially opportunistic for our GAINSCO team, agency base, policyholders and plans for future growth.
“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.”