Employers Holdings Buys AmCOMP For $193 M

Reno, Nev.-based Employers Holdings, Inc. announced yesterday that it would acquire AmCOMP Incorporated in a $230 million deal that includes the assumption of $37 million in debt.

Employers said the acquisition will expand its workers' compensation insurance operations to a total of 26 states, and advances the company vision of "being the leader in the property and casualty insurance industry specializing in workers' compensation."

A.M. Best Co. said Employers "A-minus" (excellent) ratings would be unchanged by the transaction and it would now set a financial strength rating for AmCOMP, which it had not previously followed.

Under the terms of the merger agreement, which has been approved by the boards of both companies, holders of AmCOMP's approximately 15 million common shares will receive $12.50 in cash for each share.

Employers said it expects to finance the purchase price through a combination of cash and debt. Completion of the transaction is subject to various conditions, including the receipt of required regulatory approvals and the approval by AmCOMP's stockholders. The transaction is expected to be completed in the second quarter of this year, the company said.

Douglas D. Dirks, Employers president and chief executive officer, said in a statement that the acquisition is "a significant milestone" for his firm.

The deal will significantly accelerate "growth in our expansion states as well as opens up new markets in our small business workers' compensation line - the key focus of our company," he said.

Mr. Dirks added that AmCOMP's sales force of over 900 agencies "will greatly expand our distribution system in both new and existing states. Equally as important, we will add to our staff nearly 500 experienced and knowledgeable AmCOMP professionals."

Employers noted that its business operations have historically been focused in the Western United States, while AmCOMP's focus has been in the Southeast and Midwest. The company said only slightly more than 1 percent of Employers current business is in states where AmCOMP conducts business, with virtually no overlap in the markets of the two companies.

Fred R. Lowe, AmCOMP president and CEO, said "This transaction provides excellent value for AmCOMP's stockholders while opening new geographical territories and markets in the small business workers' compensation line."

He said his company currently writes business in 18 states and after the acquisition, the combined entity will be actively writing business in 26 states, including California and Nevada.

Mr. Dirks also said that, "The acquisition of AmCOMP is financially attractive to our shareholders and will produce results that are accretive to our earnings, return on equity and book value per share. We also expect to realize expense-related efficiencies and see a meaningful improvement in our leverage."