American Family to buy Permanent General for $239 million [Milwaukee Journal Sentinel]

Sept. 25--American Family Insurance said Tuesday it plans to acquire a Tennessee-based insurer that sells auto policies to higher-risk drivers.

Madison-based American said it would pay $239 million to buy Nashville's PGC Holdings Corp. and its subsidiaries from Capital Z Partners, the majority owner of PGC. PGC operates Permanent General and The General insurance companies.

The transaction, which is subject to regulatory approval, is expected to close later this year.

"American Family Insurance will grow by reaching out to customers in new states and new markets, and also by strengthening our appeal to customers in our existing states," said Jack Salzwedel, American Family chairman and chief executive officer. "This acquisition expands our holdings to include a company with different capabilities that also operates in some states we don't currently serve. It also provides American Family an opportunity to learn from a company with successful experience in direct insurance sales."

PGC Holdings, also known as Permanent General Companies, will remain a completely separate brand from American Family and will continue to operate as a separate entity. Employee positions will be retained, and Randy Parker will continue in his role as Permanent General's chief executive officer, the insurer said.

At the end of 2011, Permanent General reported $397 million in assets, $135 million in statutory surplus and $350 million in annual revenue. The company employs about 750 people, with 400 at its Nashville headquarters and 350 at other locations, including call centers in Cleveland, Nashville and Phoenix.

"This is an exciting day for PGC and our associates," Parker said. "We are looking forward to the opportunities and potential growth that can be achieved by aligning with a company that is financially strong, service-driven and focused on providing outstanding value to its customers. We feel strongly that it's the right time and right company for PGC to partner with as we continue to expand our national presence."

American Family, which is the top seller of auto and insurance policies in Wisconsin, said Tuesday it also has an agreement in a separate transaction to acquire Illinois-based Lumbermens Casualty Insurance Co., which is a subsidiary of Lumbermens Mutual Casualty Co.

American Family said the Lumbermens purchase gives it flexibility to expand into other states in the future.

Lumbermens stopped selling and renewing policies in 2003, and is a shell company. However, it still is licensed to sell auto, homeowner and umbrella policies is 40 states. Lumbermens was placed in "rehabilitation" by an Illinois court in July of this year, and the court has approved its sale to American Family. The deal is expected to close Oct. 1. Terms weren't disclosed.

American Family currently sells insurance in 19 states.

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