Kemper bolsters auto insurance biz in $1.4B merger with Infinity

Kemper Corp. (NYSE: KMPR) has reached an agreement to acquire U.S. insurance provider Infinity Property and Casualty Corp. (Nasdaq: IPCC) for approximately $1.4 billion in cash and stock. The merger brings together a company with enhanced capabilities providing “nonstandard auto insurance."

Infinity, headquartered in Birmingham, Alabama, is a national provider of auto insurance for the consumer and commercial industries. The target serves the “needs and choices of urban and Hispanic customers” through a network of nearly 10,600 independent agencies and brokers. The combined company intends to offer a more diversified portfolio of products across auto, home, life and health insurance. The deal will help spur more “competitive prices” for the merged company.

Kemper CEO Joseph Lacher Jr. says, “This compelling transaction combines two well-known brands with complementary strengths and cultures to form a leader in nonstandard auto insurance, and enhances Kemper’s overall growth opportunities, diversification, financial strength, and ability to serve policyholders.”

Chicago-based Kemper is also one of the major insurance providers in the U.S. The buyer specializes in home, property and casualty, auto, life and health insurance products for individuals, families and small businesses. Founded in 1990, Kemper previously operated as Unitrin Inc. and transitioned to the company’s current name in August 2011. The Infinity merger is expected to close in the third quarter of 2018.

Consolidation among a variety of insurance providers has been a hot topic in recent years. Other middle-market deals involving the insurance sector, includes: HGGC’s Davies Group purchasing Total Loss Settlement Ltd. and another tuck-in company; in addition to American International Group Inc.’s (NYSEL AIG) deal to sell mortgage insurer United Guaranty Corp. to Arch Capital Group Ltd. (Nasdaq: ACGL).

Goldman Sachs & Co. (NYSE: GS) is acting as financial adviser to Kemper, while Sidley Austin LLP is serving as legal counsel. Deutsche Bank Securities Inc. is acting as financial adviser to Infinity, and Keating Muething & Klekamp LLP is acting as legal counsel.