National Interstate Corp., headquartered in Richfield, Ohio, announced that its principal insurance subsidiary, National Interstate Insurance Co., will acquire Fenton, Mo.-based Vanliner Insurance Co., a subsidiary of UniGroup Inc.
Vanliner provides insurance for the moving and storage industry.
Under the agreement, National Interstate will pay approximately $125 million to $135 million in cash, which represents Vanliner’s tangible book value at closing.
UniGroup has agreed to provide National Interstate with comprehensive financial guarantees related to the runoff of Vanliner’s balance sheet following the close whereby both favorable and unfavorable balance sheet development inures to UniGroup.
National Interstate does not expect the transaction to have a material effect on 2010 earnings. Beginning in 2011, the acquisition is expected to be accretive to earnings and return on shareholders’ equity.
Vanliner wrote approximately $104 million of gross moving and storage premiums in 2009, representing approximately 58 percent of its total business.
A closing is anticipated in the 2010 second quarter subject to customary closing conditions and regulatory approvals.
At closing, National Interstate and UniGroup will enter into a five-year agreement whereby Vanliner will remain the exclusively endorsed insurance provider for UniGroup’s affiliated Mayflower Transit and United Van Lines moving and storage agents.
Vanliner will continue to operate from its current offices in Fenton, Mo., a suburb of St. Louis.
Source: National Interstate Corp.