American Financial Group Inc., the insurer run by Cincinnati's Lindner family, agreed to buy Summit Holdings Southeast Inc. from Liberty Mutual Group Inc. for about $250 million to build its workers' compensation business.
The total investment in Summit will be about $400 million, including a capital contribution at the completion of the all-cash deal, which is expected by June 30, American Financial said in statement today. The eventual purchase price is tied to fluctuations in Summit's book value.
American Financial is expanding its operation protecting employers against the cost of worker injuries as the economy recovers and clients add staff. The insurer also provides annuities and crop insurance.
"New business opportunities, increased exposures from higher payroll and existing accounts, strong retentions and higher renewal pricing have contributed to the strong growth" in workers' compensation, American Financial co-Chief Executive Officer Carl Lindner III said in an Oct. 30 earnings call.
The U.S. unemployment rate fell to 7 percent in November, the lowest since 2008. The number of applications for unemployment insurance payments declined by 15,000 to 330,000 in the week ended Jan. 4, the fewest since the end of November, the Labor Department said today.
The acquisition of the Lakeland, Fla.-based business will fuel growth in the Southeastern U.S., American Financial said. Summit generates about $520 million in policy sales, according to the statement.
