Ohio Casualty officially joins the Liberty Mutual agency family

With $7.3 billion in premium, Liberty Mutual Agency Markets becomes the largest regional independent agency force

Boston-based insurance giant Liberty Mutual Group is now the largest regional provider of property and casualty insurance distributed through independent agents in the country.

Th insurer finalized its acquisition of Ohio Casualty Corp. on Aug. 24. The company then announced a realignment of its $5.9 billion net premium regional agency company organization to make room for Ohio Casualty and its $1.4 billion in premium.

The transaction was valued at $2.7 billion. Liberty Mutual said it funded the purchase with cash on hand and short-term debt. The value per share was $44.00.

The move strengthened Liberty Mutual’s agency presence in Midwestern and Atlantic states, complementing its position in other regions.

“The addition of Ohio Casualty enhances the scale and geographic diversification of our Agency Markets business unit while strengthening the overall Liberty Mutual Group,” said Edmund F. Kelly, Liberty Mutual Group chairman, president and chief executive officer, in a statement.

Based on 2006 results compiled by A.M. Best Co., the combined $7.3 billion in net written premium makes Liberty Mutual’s Agency Market division the largest regional provider of property and casualty products sold through independent agents in the country.

“We are today a stronger family of regional and specialty companies that remains committed to local decision-making, strong agency relationships and ease of doing business that have made us the company of choice for independent agents; and we add Ohio Casualty’s talented and dedicated employees across the country to our already strong team,” said Gary Gregg, president of Liberty Mutual Agency Markets, a division that includes eight insurers selling through independent agents and brokers.

The companies in Liberty Mutual Agency Markets have more than 6,800 employees and approximately 6,500 appointed agencies. Ohio Casualty, which has approximately 2,100 employees and operations in 48 states, has approximately 3,400 appointed agencies.

Gregg said there would be some employee layoffs in the future but that the company hoped to retain most of the agents.

Ohio Casualty Corp. is the holding company of The Ohio Casualty Insurance Co. and five property and casualty insurance companies (Ohio Casualty, West American, American Fire and Casualty Co., Ohio Security, Avomark and Ohio Casualty of New Jersey, Inc.).

Gregg said the acquisition has resulted in a realignment of Agency Markets in order to take advantage of Ohio Casualty’s strength in Midwest and Atlantic states. Ohio Casualty will retain its name and cover Delaware, Kentucky, Maryland, Ohio, Pennsylvania, Virginia, D.C. and West Virginia.

The overall new line-up of Agency Markets companies is:

America First Insurance: Arkansas, Kansas, Louisiana, Missouri, Oklahoma and Texas

Indiana Insurance: Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin

Montgomery Insurance: Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee

Ohio Casualty: Delaware, Kentucky, Maryland, Ohio, Pennsylvania, Virginia, Washington, D.C., and West Virginia

Peerless Insurance: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont

The three additional agency companies — Colorado Casualty (Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming), Golden Eagle (California) and Liberty Northwest (Alaska, Idaho, Montana, Oregon and Washington) will continue to operate in their current territories, Also, the specialty lines operations will be combined into the Specialty Products Group.

The operations of the former Hawkeye-Security Insurance are being split between America First and Indiana Insurance. Hawkeye-Security sold personal lines in Iowa, Kansas, Missouri, and Wisconsin and commercial insurance in Iowa, Kansas, Minnesota, Missouri, Nebraska, and Wisconsin.

Liberty Mutual Agency Markets also includes Wausau Insurance, a national commercial property and casualty insurer; and Summit Holding Southeast, Inc., workers compensation insurer in the Southeast.

Dan Carmichael, president and chief executive of Ohio Casualty, will stay on as an executive consultant to Gregg and will help with implementation of the acquisition.

David Lancaster has been named president and chief executive officer of Indiana Insurance, and Michael Winner has been named president and chief executive officer of Ohio Casualty. John Busby has been named senior vice president and chief operating officer, Specialty Products Group.