Toronto-based Kingsway Financial Services announced today it has reached a definitive agreement to acquire Mendota Insurance Company, a nonstandard auto specialist, from The St. Paul Travelers Companies.
Financial terms for the deal, that includes St. Paul, Minn.-based Mendota's wholly owned subsidiaries Mendakota Insurance Company and Mendota Insurance Agency, were not announced.
Mendota is the dedicated nonstandard automobile insurance operation of St. Paul Travelers, which wrote roughly $175 million of nonstandard auto business in 2006. The company is licensed in 43 states and currently writes business in 20 through a network of about 6,000 independent agency locations.
In a statement, Bill Star, president and chief executive officer of Kingsway, said, "This transaction is consistent with our strategy to become a dominant player in the nonstandard automobile market in the United States."
Kingsway Financial Services Inc. is one of the largest truck and nonstandard automobile insurers in North America, the company said.
Kingsway's primary business is trucking insurance and the insuring of automobile risks for drivers who do not meet the criteria for coverage by standard automobile insurers.
Kingsway currently operates through 11 wholly owned insurance subsidiaries in Canada and the United States.
Following the announcement, Oldwick, N.J.-based A.M. Best put the "A" financial strength ratings of Mendota and Mendakota under review with negative implications, commenting that the firms will no longer be part of St. Paul Travelers and will need to be evaluated based on their strategic positioning within Kingsway.
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