The eighth biggest auto insurance provider in the United States is negotiating with the parent firm of Harleysville Group Inc, an auto insurance company based in Pennsylvania in order to purchase the company, informed sources who is privy to these negotiations.
These sources, who wanted to ensure anonymity due to the confidentiality of the discussions, also went on to say that the final deal may be signed in a matter of days. However, they also said that there are chances that the negotiations may fall apart. The market value of Harleysville Group as of 22nd September, 2011 was $690 million. The policyholders of Harleysville Mutual Insurance Company are the major shareholders of this group, just like Nationwide.
Stephen Rasmussen, the Chief Executive Officer of Nationwide, who took over this post as of 2009 would put this down as the first acquisition for the company with him at the helm. This acquisition would also prove to be give a sales boost to Nationwide, with headquarters in Columbia, Ohio since they can add customers in the Eastern and Midwest region of the country to their extensive profile, which includes auto insurance, business insurance and home insurance.
Joe Case and Randy Buckwalter, the spokespersons for Nationwide and Harleysville respectively, refrained from commenting. As per the reports from SNL Financial, as of June end, the Harleysville insurance group not only had a statutory surplus, but also minus liabilities assets totaling a little over $1.3 billion.
The annual report from Nationwide has revealed that the property-casualty premiums over the last twelve months generated close to $14.4 billion which was a 4 percent fall as compared to 2009. In the year 2010, Harleysville insurance group made sales totaling to $1.1 billion. On 23rd September, the share price of Harleysville rose up by 24 percent, which is $5.99, and stood at $31.32 by close of day. However, through the year, the share price of this insurance group has fallen by 31 percent.
If Nationwide does manage to buy out Harleysville insurance group, it is not sure how it will impact the customer base of both companies. Both these companies have a strong market presence in their respective regions and a loyal customer base. They have been in existence for decades now and understand the nuances of the auto insurance market and other aspects of insurance industry such as home owners insurance and business insurance as well.
