Zurich, Switzerland/Los Angeles, U.S., October 19, 1999
The Zurich Financial Services Group announced today that the Insurance Exchanges managed by its wholly owned subsidiary, Farmers Group, Inc., have entered into an agreement to acquire Foremost Corporation of America (Foremost). Foremost (FOM-NYSE) is the leading insurer of manufactured homes - including motor homes, travel trailers and other specialty lines - in the U.S. with net written premiums in 1998 of USD 442 million. The purchase price of USD 812 million will be met from the existing cash resources of the Exchanges. To support the surplus position of the Exchanges, Farmers Group, Inc. will purchase USD 367 million of surplus notes to be issued by the Exchanges. The transaction is expected to provide an attractive return on investment to the Exchanges, to generate an immediate and increasing stream of fees to the Farmers Group, Inc. and to become accretive to Zurich Financial Services Group’s earnings from the first year.
It is planned to complete the acquisition during the first quarter of 2000. The final agreement is subject to the approval of Foremost’s shareholders, regulatory and other approvals.
Martin Feinstein, Farmers Group’s Chairman, President and CEO, commented on the transaction: "Foremost is the eleventh largest insurer of homes in the U.S. with more than 1 million policies. It has produced outstanding results and has a very strong franchise in the fast growing manufactured home segment, which accounts for one of every four new homes currently built."
Rolf Hüppi, Chairman and CEO of Zurich Financial Services said: "This transaction perfectly fits with our Group’s strategy to focus on selected customer market segments. Moreover, it demonstrates the unique flexibility of the structure of the Farmers Group".
Foremost Corporation of America is based near Grand Rapids, Michigan. Foremost subsidiaries specialize in manufactured home, motor home, trailer and specialty property insurance. It has an estimated market share of 21% of the manufactured home insurance business (more than 1 million policies) and 4% (130,000 policies) of motor homes and trailers. More than 20,000 independent agents distribute its products through 45,000 outlets nationwide.
The Farmers Insurance Group of Companies, headquartered in Los Angeles, provides more than 16 million home, auto, business and life insurance policies to nearly 9 million households through 15,000 Farmers agents and district managers. Farmers Group, Inc., the management and holding company for the group, is a member of the Zurich Financial Services Group. It provides management services to the Farmers Insurance Exchanges (Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance Exchange).
