If Progessive Corp.’s Flo wasn’t sufficiently excited selling auto insurance, she’ll have something new with which to whet her appetite in April.
The number four auto insurer announced yesterday it will pay $875 million for a majority stake in ARK Holding Corp. as part of a bid to expand into the home insurance sector. Progressive now owns 67% of the Ohio-based firm, which was the number 18 seller of US homeowners’ coverage in 2013.
Progressive says it is looking to compete with rivals like
Allstate, which announced in 2011 it would be taking over Esurance to challenge Progressive’s hold on the market in addition to its homeowners policies.
“Progressive is committed to becoming the insurance destination brand for consumers,” said company CEO Glenn Renwick. “As such, we need the reliable availability of many more products than we intend to manufacture.”
John Auer, CEO of ARX’s American Strategic Insurance, also praised the deal.
“Our intention has long been to become the Progressive of home insurance,” Auer said in a statement, noting a “predictable and stable long-term outlook” as a result of the new arrangements.
American Strategic currently offers products in 26 states and Washington, D.C. and plans to add more locations in 2015. It will continue operating as a separate company with its own management team.
ARX also offers property insurance, personal umbrella policies and flood coverage.
With the deal, the company increases its stake in ARX from 5%, and will be purchasing 40% stake from XL Group. The Dublin-based company will receive gross proceeds of about $500 million.
Progressive says it plans to purchase the rest of ARX over the next six years, with the current deal expected to be complete by April 1.
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