Mercury Casualty Co., the largest insurance subsidiary of Los Angeles-based Mercury General Corp., has agreed to buy Auto Insurance Specialists Inc. from Aon Corp.
AIS is an independent broker and major producer of automobile insurance in California. It reported $400 million of direct premiums written during 2007.
The transaction is expected to close in the first quarter of 2009.
The purchase price of the transaction is $120 million plus a potential
earn out of up to $34.7 million, payable during the two-year period following the transaction closing date.
The sale includes business transacted under the Auto Insurance Specialists Inc., PoliSeek and Aon Recreation Insurance brands.
Mercury said it plans to finance the purchase through a term loan, the terms of which are under negotiation. The company said it expects the acquisition to be slightly accretive to earnings.
Aon said the sale is consistent with Aon’s previously announced plan to shape the firm around risk management and commercial lines insurance brokerage, reinsurance brokerage, and human capital consulting.
Mercury General Corp. and its subsidiaries sell predominantly personal automobile and homeowners insurance through independent producers in several states.
Mercury General Corp.