The acquisition is reported to be for $400 million, according to a news release last week.
State Farm and the Dallas-based Gainsco insurance company have come to an agreement in which the former will be acquiring the latter for $400 million.
The 98-year-old industry giant has never acquired another insurer in its entire history.
The deal will have State Farm purchasing all of the Gainsco insurance company’s stock. The acquired insurer will continue its operation as a separate business. However, in time, the two companies will start the process of combining the products they offer consumers, said the statement from State Farm. Pending the approval of the acquired insurer’s shareholders, the deal is expected to close early next year.
“We are excited for the opportunity State Farm agents will have to serve a market that has historically not been open to them,” said Michael Tipsord, State Farm CEO and president, in a statement. “This will help us further toward our goal of serving more customers in more ways.”
The Gainsco insurance company was founded 41 years ago and will be completely acquired in the deal.
Headquartered in Oak Lawn, the insurer originally opened its doors in 1978. Its specialty is in providing personal auto policies at minimum limits. That means that they provide drivers with the minimum legally required coverage in each state in which they operate. More than 400 people in Dallas are employed by the insurer. For the moment and immediately after the deal closes, they will remain employed in their current positions, unchanged.
The insurer’s parent company, MGA Insurance Co., mainly serves high-risk, lower-income customers. This is a very specific market that has not necessarily been particularly targeted by State Farm on the whole. The acquired insurer is publicly held, though it is a firm that does not report its earnings to the US Securities and Exchange Commission.
“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,” said Gainsco insurance CEO Glenn Anderson in a statement.