Dateline: 19/10/1999
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).
The Zurich Financial Services Group is a global leader in the financial services industry, providing its customers with solutions in the area of financial protection and asset accumulation. The Group concentrates its activities in four core businesses: non-life and life insurance, reinsurance and asset management. Headquartered in Zurich, Switzerland, the Group’s worldwide presence builds on strong positions in its three home markets -- the United States, the United Kingdom and Switzerland. It has offices in more than 60 countries reaching over 33 million customers and employing 68,000 people. Based on consolidated figures for 1998, the Group achieved gross premiums of USD 45 billion. This amount includes insurance deposits as well as premiums from the Farmers Exchanges. The net income before one-time merger and other restructuring costs amounted to USD 2.8 billion. On June 30, 1999, the Group had USD 423 billion of assets under management of which USD 257 billion represent funds managed for third-party institutional and retail customers.
For further information please contact:
Zurich Financial Services, Media and Information, Iris Roth,
CH-8022 Zurich, Switzerland
Phone +41 (0)1 625 21 00, Fax +41 (0)1 625 26 41