Nationwide to Acquire Harleysville Insurance; Valued at $800M

Updated: 3:44 p.m. EDT

NU Online News Service, Sept. 29, 9:42 a.m. EDT

Nationwide Mutual Insurance Co. will acquire Harleysville Mutual Insurance Co. in a deal valued at around $800 million, the companies announced today.

“This combination brings together two best-in-class companies that share a mutual heritage and a focus on meeting the long-term needs of our policyholders,” says Steve Rasmussen, chief executive officer of Nationwide. “With Harleysville’s expertise in commercial lines and Nationwide’s complementary geographic distribution, there will be a substantial opportunity to increase market share, while also providing our combined agents and customers access to a broader portfolio of insurance, financial and banking products.”

Michael Browne, president and CEO of Harleysville says the transaction “will enable us to expand our business for our independent agency partners, and to enter important new markets from a position of even greater strength.”

Under the deal, which is expected to close early next year, Harleysville Mutual will merge with Nationwide Mutual while Harleysville Group, the publicly traded company, will become a newly formed subsidiary of Nationwide Mutual. Shareholders will receive $60 per share in cash.

According to Google finance, there are more than 27 million shares outstanding of Harleysville. A Nationwide company spokesman explained that under a complicated scenario the number of publicly held shares Nationwide would pay for amounts to somewhere between $760 million to $800 million. The remaining outstanding shares held by Harleysville Mutual would be acquired by Nationwide and retired. 

Under the agreement, Harleysville will join Nationwide’s property and casualty independent agency business unit under the Harleysville brand. Its current headquarters in Harleysville, Pa., will “serve as an integral part of the combined company’s national, independent agency-based platform.”

Browne will become the president and chief operating officer of the Harleysville company.

The companies say that the combined operations will have an estimated net surplus of more than $13.5 billion and over $16 billion in annual direct written premiums.

The agreement between Harleysville and Columbus, Ohio-based Nationwide is still subject to regulatory approval. The companies say they expect the treansaction to close by early next year

Talks between the two companies were reported earlier this week.

Moody's Investor Service issued a statement affirming the financial strength rating of Nationwide Mutual and its P&C affiliates at "A1."

Moody's analyst Paul Bauer says in a statement that the acquisition of Harleysville by Nationwide is "to be a modest credit negative," but the added risk from the acquisition "is manageable for Nationwide without affecting the company's current rating."

On the positive side, he went on to say, the acquisition is expected to improve the company's "scale and geographic diversification by adding a strong presence in the mid-Atlantic and Northeastern states." It will also help strengthen product diversification by increasing Nationwide's position in small commercial lines market.

Late in the day, Moody's placed Harleysville financial strength rating of "A3" on review for possible upgrade.

Nationwide has both independent agents and captive agent distribution. It has a presence in P&C, life insurance and financil services markets.

This story was updated at 3:44 p.m. EDT with updated information about the valuation and Moody's statements.  


Resource Center

View All »

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Drug and Alcohol Testing Requirements

In this two-part series, NBIS Risk Management team will break down the requirements to assist...

Why Cyber Liability is Essential for Human Service Organizations

For traditional low-tech operations, information is often compromised in ways that don't involve technology. Access...

A Solution for Large Commercial Habitational Accounts

6 Reasons to place your LARGE Habitational Accounts with Dauntless.

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.