Markel to Acquire State National for $919 Million

July 26, 2017

Markel Corp. will acquire Texas-based State National Companies Inc. for $919 million, a deal that the Virginia-based insurer and reinsurer said will help diversify its underwriting and revenue streams.

Both companies’ board of directors voted unanimously to approve the deal, which calls for Markel to pay $21 per share to acquire all outstanding shares of State National common stock. Plans call for closing the acquisition in the 2017 fourth quarter, assuming State National shareholders and state regulators approve the deal.

State National is a specialty property/casualty insurance services provider focused on collateral protection insurance that insures personal automobiles and other vehicles held as collateral for loans made by credit unions. Its Program Services segment provides access to the U.S. property/casualty insurance market in exchange for ceding fees.

According to its website, State National is the largest and longest-standing pure-play U.S. insurance fronting business with approximately $1.4 billion in gross written premium (2016) and more than 60 programs. It employs about 400 people.

Markel is already well on its way to gaining State National shareholders’ approval. About 37 percent of the company’s common stock is already committed to vote in favor of the transaction, thanks to a voting agreement with the Ledbetter family (State National’s founders) and CF SNC Investors LP., Markel and State National noted in their joint deal announcement.

Richard Whitt, Markel’s co-chief executive officer, said that the acquisition is a good fit for both companies.

“State National will help us leverage our InsurTech and digital distribution initiatives, diversifying our underwriting and fee-based portfolios and revenue streams, and add to Markel’s third party capital capabilities,” Whitt said in prepared remarks. “Combining Markel’s financial strength with State National’s unique business model and proven record of success, we are confident that all stakeholders will be will served moving forward.”

Terry Ledbetter, State National’s chairman and CEO, said that his company’s board of directors decided selling the company to Markel was the ideal option “after careful and thorough analysis of a range of opportunities.”

Ledbetter, also in prepared remarks, said that the sale “appropriately recognizes the value of State National’s business model, recent growth and future market opportunities as a leading specialty provider of property and casualty insurance services operating in two niche markets throughout the United States,”

Ledbetter added that the deal “provides our shareholders with an immediate and attractive cash premium for their investment in State National.” He said that Markel also “understands the uniqueness of our business model, and will be a tremendous asset as we, together, build upon our leadership position and specialty insurance service offerings, and continue to implement our strategic plan to deliver enhanced value for our clients.”

Markel, based in Virginia, is a holding company for insurance, reinsurance and global investment operations.

Source: State National/Markel

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