Ameriprise Financial to sell Ameriprise Auto & Home to American Family
Insurance acquisition news : Ameriprise Financial announced that it has signed a definitive agreement with American Family Insurance Mutual for the sale of Ameriprise Auto & Home (AAH) for about $1.05 billion in an all-cash transaction.
Ameriprise Auto & Home, based in Wisconsin, provides auto, homeowners, renters, umbrella alongside certain specialty insurance lines in 43 US states and District of Columbia via its partners.
In 2018, the auto and home insurance business of Ameriprise Financial generated $789 million of surplus, while reporting $1.8 billion in assets to go along with an annual direct premium of $1.1 billion. Close to 70% of its premium is driven by auto insurance sales.
American retailer Costco is one of the partners of Ameriprise Auto & Home through which the majority of the sales are made by offering AAH policies to its members through its website. American Family Insurance has signed a letter of intent with Costco to retain the partnership.
Ameriprise Auto & Home products are also distributed vial referrals from Ameriprise Financial advisors.
Once the transaction is completed, Ameriprise Auto & Home will be a subsidiary of American Family Insurance group and will continue to operate under the current name until a new name is chosen and approved by regulatory bodies, as per the latest insurance acquisition news.
American Family believes that the acquisition of Ameriprise Auto & Home will expand its business geographically, which spreads out storm risk and helps further consolidate the financial position of the company
Commenting on the acquisition, Jack Salzwedel – American Family chair and CEO said: “This is about serving more customers through channels they prefer, and strengthening our ability to protect them.
“American Family exclusive agents continue to have great success. Our direct-channel companies are growing. And last year, we merged with a company that offers products through independent agents.”
“With this acquisition, we expand our efforts to reach customers who prefer to acquire insurance through relationships they have with other entities. By doing this and continuing to grow in our other channels, we build scale, capabilities and financial strength to provide greater value to our customers.”
Ameriprise Financial’s decision to sell Ameriprise Auto & Home follows a strategic review which determined that it is an appropriate time to quit the business. The sale is also said to be consistent with the strategic focus of the company on its key growth areas of Advice & Wealth Management and Asset Management.
Jim Cracchiolo – Chairman and CEO of Ameriprise Financial said: “We are proud of the exceptional value and award-winning service we’ve provided to Auto & Home policyholders over the last several decades and we sincerely thank each and every employee for their dedication and contributions.
“This transaction is consistent with our strategy to grow our less capital-intensive businesses and is expected to reduce our risk profile and increase capital flexibility. Given American Family’s financial strength and reputation for quality products and customer care, we are pleased to reach this agreement and feel confident that we will be leaving the business in good stead.”
The deal is expected to close in the second half of this year once it meets the customary conditions and secures regulatory approvals.
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