St. Petersburg-based American Strategic Insurance, a homeowners insurance company quickly expanding nationwide, is going with the Flo.
American Strategic, or ASI, is being bought by Progressive, the fourth-largest auto insurer in the country perhaps best known for commercials featuring its perpetually perky spokeswoman, Flo.
Under a deal announced Tuesday, Progressive is initially paying $875 million in cash to increase its stake in ASI's parent company, ARX Holding Corp., from 5 percent to a controlling 67 percent. Over six years, it plans to buy the rest of the company to bolster its property insurance business, challenging rivals like Allstate that bundle home and auto policies.
American Strategic will continue to operate as a separate company with its current management team staying in place, including CEO John Auer. "This is a great opportunity for ASI, as our intention has long been to become the Progressive of home insurance," Auer said. "We've been working with Progressive for years and have achieved a great deal together."
Progressive has been tethered to ASI for almost five years, Auer said, starting with ASI promoting Progressive as an auto option to prospective property insurance customers. In 2012, Progressive bought a small stake in ASI.
Progressive CEO Glenn Renwick said ASI was a strong strategic fit, but he was also attracted to ASI because of its leadership. He noted how ASI has been consistently profitable since its founding in 1997 while continuing to post double-digit growth in both premiums and return on equity. "It also has great potential for significant geographic expansion," Renwick said.
ASI is the fifth-largest homeowners insurer in Florida and one of the top 20 homeowners carriers in the country, with more than $1 billion in written premiums.
Some Florida-based property insurers have come under scrutiny for growing aggressively in this hurricane-prone state by taking policies out of Citizens Property Insurance. ASI, however, has virtually the same number of policies in Florida as it did in 2007.
Instead, it's been aggressively expanding outside Florida so that almost 70 percent of its current business is out of state. It operates in 26 states and the District of Columbia, and plans to add up to 10 more states in 2015.
With Progressive's backing and the lure of bundling auto and home products, Auer predicts ASI will be nationwide by the end of 2017.
Earlier this year, the company earned the No. 1 spot in the Tampa Bay Times Top Workplaces list in the midsize category. It was the third time within five years it claimed the top spot.
ASI has about 450 employees, most of them in its St. Petersburg headquarters. Progressive has more than 26,000 employees.
XL Group Plc is selling its 40 percent stake in ASI's parent company as part of the transaction, the Dublin-based insurer disclosed in a regulatory filing. XL said it will receive gross proceeds of about $500 million.
ASI's top managers plan to retain their interest in the company as Progressive primarily buys nonmanagement shares.
The deal is expected to close by April 1.
Information from Times wires was used in this report. Contact Jeff Harrington at [email protected]om or (813) 226-3434.