State Farm announced a merger deal Thursday to buy auto insurance company GAINSCO for about $400 million in cash.
Upon closing, the merger agreement states that State Farm Mutual will acquire all the stock in GAINSCO, Inc., the holding company of MGA Insurance Company, Inc., a Texas-domiciled insurance company, and GAINSCO shareholders will receive approximately $107.38 per share in cash.
In a press release, State Farm spokespeople said they expect the merger agreement to close in 2021 so long as GAINSCO’s shareholders approve it. It’s the first acquisition of an insurance company by State Farm in its 98-year history.
GAINSCO spokespeople said the company would continue to operate as a separate company and brand focusing on its current objectives. Over time, the parties expect to provide State Farm agents the opportunity to distribute GAINSCO products and State Farm products and services.
“We believe this acquisition positions both our company and GAINSCO well for future growth,” said Michael Tipsord, State Farm President, Chairman, and CEO.
“Because of our competitive value, broad line of products, and exceptional customer service from our employees and 19,200 State Farm independent contractor agents, customers have made us the largest property and casualty insurer for several decades. We are excited for the opportunity State Farm agents will have to serve a market that has historically not been open to them. This will help us further toward our goal of serving more customers in more ways.”
“This transaction creates value for GAINSCO’s shareholders and is especially opportunistic for our GAINSCO team, agency base, policyholders, and plans for future growth.” said GAINSCO Executive Chairman Bob Stallings.
“GAINSCO is a leading provider of non-standard auto insurance products in the markets we serve, and we look forward to partnering with State Farm, its agent network, and our existing agency channels to achieve our mission of becoming a nationwide leader in the fastest-growing segment of the auto insurance market.”
“State Farm has an extraordinary market reputation and a highly capable independent contractor agency system,” said GAINSCO CEO Glenn Anderson.
“GAINSCO looks forward to providing our very successful minimum limits auto insurance program to State Farm agents in the future while continuing to partner with our own outstanding agency system as we expand across the country. We are excited that, in joining forces with State Farm, we will accelerate our long term mission to become the best nationwide non-standard personal auto insurer in the industry.”
GAINSCO concentrates on the non-standard personal automobile insurance market, specializing in minimum-limits personal auto insurance.