Vesta Insurance Group Inc. is planning four separate transactions, the centerpiece of which is two acquisitions that will enable Vesta to offer a wider range of personal lines insurance products. Vesta also intends to provide its agency force an opportunity to be rewarded through company stock. Also, Vesta has completed a debt for equity swap.
Vesta acquired a 52 percent economic interest in Instant Insurance Holdings, Inc. (dba Instant Auto), a company that utilizes Internet and telephone platforms to distribute nonstandard auto insurance. Instant Auto began operations in 1998 with initial funding from Capital Z Partners, a private equity firm with $4.4 billion under management in the financial services and insurance industries.Vesta acquired the capital stock of Instant Auto for a combination of 552,000 shares of Vesta common stock and a $10 million cash infusion.
Alongside Vesta’s investment, Capital Z and other investors contributed an additional $3.2 million, and Capital Z maintains a significant ownership position in Instant Auto. Currently, Instant Auto distributes insurance in six states and will use the cash infusion to accelerate the development of its retail distribution platform, both through the acquisition of non-standard auto agencies and development of its telephone and Internet-based retail sales channels.
Vesta also announced the acquisition of the capital stock of Aegis Financial Corp., a holding company for a life and accident and health insurer for a combination of approximately 950,000 shares of Vesta common stock and $7.5 million in cash. Aegis, through its wholly owned subsidiary, States General Life Insurance Company, has approximately $17 million of accident and health premiums in force and approximately $82 million (face value) of life insurance products in force.
Both acquisitions, which are subject to regulatory approval, are expected to close in the first quarter of 2001 and be accretive to earnings in 2001. Management in both companies is experienced and will remain with their respective companies.
In addition, Vesta announced that it intends to create an incentive plan to give its agency force an opportunity to acquire company stock for outstanding performance. The Vesta Agents Stock Incentive Plan, a vehicle for qualifying agents to acquire Vesta common stock at a discount to market price, is expected to be made available to the agency force in the first quarter of 2001. Vesta has established the Vesta Agents Stock Incentive Plan Trust to currently hold 750,000 shares of the Company’s common stock in trust for future allocations to participants of the Plan.
Topics Mergers & Acquisitions Auto Agencies
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