With acquisition, Liberty Mutual one of largest insurers in U.S.
Liberty Mutual Group’s latest acquisition will allow the company to jump past rival Travelers Cos. and become one of the country’s five biggest property and casualty insurers.
Liberty Mutual, which is headquartered in Boston’s Back Bay, said on Wednesday that it reached an agreement to buy Safeco Corp. of Seattle for about $6.2 billion, or $68.25 per share. The price represents a 51 percent premium over Safeco’s closing stock price on Tuesday.
Liberty Mutual is currently the sixth-largest property and casualty insurer in the country, based on the value of its customers’ premiums in 2007. The Safeco acquisition would allow Liberty Mutual to leapfrog past one of its biggest competitors, Travelers, of St. Paul, Minn., into the No. 5 spot.
“We think it’s terrific news,” said Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce. “It makes a very strong company even stronger. ...When you acquire a large company like Safeco, it says a lot about Liberty’s capabilities. This isn’t an acquisition that a lot of companies could have done.”
The acquisition would help Liberty Mutual expand its surety business, which involves providing guarantees for construction contractors, and beef up its options for small businesses, representatives for both companies said. The acquisition also would enhance Liberty Mutual’s West Coast presence.
“We both have very strong brands,” said John Cusolito, a spokesman for Liberty Mutual. “Safeco’s geographic operations are very strong west of the Mississippi, and ours are stronger in the East.”
Liberty Mutual plans to keep the Safeco brand intact. But it’s unclear what the acquisition would mean for the work forces at Liberty Mutual, which employs about 41,000 people worldwide, and Safeco, which employs about 7,000 people, including about 2,000 in its hometown of Seattle.
David Monfried, a senior vice president of corporate communications at Safeco, said the companies will know more about the impact on Safeco’s management and work force when the deal closes, which is expected to occur by the end of September.
The deal still needs to be approved by Safeco’s shareholders and by insurance regulators in several states.
The name of Safeco Field, the home stadium for the Seattle Mariners, will survive the merger.
“There will be a Safeco Field today. There will be a Safeco Field tomorrow,” Monfried said. “There will be a Safeco field until the Mariners bring home the World Series.”
Jon Chesto may be reached at email@example.com.