In a First, State Farm to Acquire Texas Nonstandard Auto Insurer GAINSCO

September 17, 2020

  • September 17, 2020 at 7:20 pm
    Oh boy says:
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    If this giant ever wakes up and gets its act together the competitors like Allstate, Chubb, etc better run for the hills. They have more surplus, capital and policyholders than anyone.

    They could offer non-standard or high net worth products to their giant sales force, or better yet independent agents and completely crush their competitors.

    • September 17, 2020 at 10:31 pm
      okt0ber says:
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      They could, but probably won’t being an Illinois based company. ‘Getting your act together” isn’t something the citizens of Illinois have been capable of for decades. That applies to government and many of the corporations.

  • September 18, 2020 at 7:42 am
    Ned N says:
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    This is just to whet the appetite and see what happens which a small acquisition. As mentioned first time ever and only 400 million. That is small potatoes relative to the insurance world. I am presuming there will be more and bigger. The first domino only took 98 years. The rest get increasingly easier with lesser uncertainties.

  • September 18, 2020 at 9:07 am
    SWFL Agent says:
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    Yes, $400mm is small change for them but it’s an interesting purchase. What could they possibly gain from this? An intro to the IA channel? Probably not, since agents representing Gainsco aren’t that representative of the entire IA group. Data on NS auto? Not sure Gainsco has some black box methodology that State Farm can’t learn on their own.

    • September 18, 2020 at 11:24 am
      Earl says:
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      They purchased policy counts, pure and simple. It was a fairly easy way to bump numbers to stay ahead of GEICO, Progressive, etc. It’s also a fairly low-risk way to dip their toes into M&A, before going after someone bigger in another year or two.

    • September 18, 2020 at 1:21 pm
      Mr. Solvent says:
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      It gives them a market for non-standard auto without sullying the State Farm brand name. Think Nationwide and Titan/Victoria.

      • September 18, 2020 at 3:12 pm
        Bill says:
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        I agree that access to the non-standard market without putting their name on it is very possibly the reason for this move. For years State Farm agents have had to send all non-standard business down the road to independent agents. Now they can keep it in-house.

  • September 18, 2020 at 12:27 pm
    slapshotpuc says, says:
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    ALLSTATE took over National general who released its captive recently, but it is not clear how this agents merger will work for independents becoming Allstate agents, or Allstate agents becoming independent? It cost 100K to become a captive agent with no equity. It is all about carrier survival tactics that is certain to continue. Warren buffet showed them how. Buying new capital and surplus and assuming all liabilities for less cash is working for both carriers family stakeholders. Independent agencies and brokers are merging daily. TV direct sales are already crushing the markets. No carrier wants to own all markets. How many Gainsco agents are therein play will tell the pre planning story.

  • September 18, 2020 at 1:13 pm
    John Kent says:
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    Looks like State Farm is following in the footsteps of American Family, becoming an enterprise. American Family acquired The General a few years ago, which sounds similar to the Gainsco purchase.

  • September 18, 2020 at 2:36 pm
    John Kent says:
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    Sounds like State Farm is following in the footsteps of American Family Insurance, becoming an enterprise. Amfam bought The General a few years ago, now the Amfam agents sell The General. I wonder how State Farm with turn Gainsco into a mutual insurance company?

  • September 18, 2020 at 3:31 pm
    Eddie Hall says:
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    State Farm doesn’t need a non standard market. They are insuring people with bad driving records that they would have never insured in the past. I have had homeowner risk that I wouldn’t write with a standard company because the roof was 20 years old and in bad shape but State Farm would insure them. You’re buying a claim in this situation so State Farm can have them. I recently had an insured that had a DUI 4 years ago and a speeding ticket 2 years ago and was paying $1,800 per six months with Progressive. State Farm insured them for $900 every six months and increased their coverage. I expect to read in a few years that State Farm is losing money and must increase rates.

    • September 20, 2020 at 9:20 pm
      okt0ber says:
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      State Farm generally only looks at a 3 year MVR, so as far as they were concerned, it was someone with a single speeding ticket. There are lots of companies that operate that way.

  • September 18, 2020 at 3:35 pm
    Alan says:
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    Having been a past commercial lines underwriter at State Farm, I can attest that they’ll insure any risk to gain an entry into writting an insured’s homeowners and life insurance policies.

  • September 23, 2020 at 1:25 pm
    Jack says:
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    They bought a book of business to enter a market place (high risk) that sooner or later eats your lunch…ask Progressive.



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