Establishes Leading Provider of Nonstandard Auto Insurance with
Scale and Focus to Deliver Differentiated Product Offerings
Transaction Creates Attractive Returns for Shareholders Through
Meaningful EPS, ROACE and ROATCE Accretion
CHICAGO & BIRMINGHAM, Ala.--(BUSINESS WIRE)--
Kemper Corporation (NYSE: KMPR) and Infinity
Property and Casualty Corporation (NASDAQ: IPCC) today announced
that they have entered into a definitive merger agreement under which
Kemper will acquire Infinity in a cash and stock transaction valued at
approximately $1.4 billion, or $129.00 per share; the exchange ratio for
stock consideration to be issued in the merger is fixed and was
determined based on Kemper’s 20-trading day volume weighted average
price as of February 12, 2018 of $64.40. Based on Kemper’s February 12,
2018 closing stock price of $57.75, the implied total consideration is
approximately $1.3 billion, or $121.01 per Infinity share. The
transaction creates a company with increased scale in nonstandard auto
insurance and enhanced ability to serve policyholders.
Infinity is a provider of auto insurance focused on serving the
specialty, nonstandard segment. With approximately 2,300 employees,
10,600 independent agents and $1.4 billion in 2017 direct written
premiums, Infinity is one of the largest nonstandard auto insurers in
the country.
“This compelling transaction combines two well-known brands with
complementary strengths and cultures to form a leader in nonstandard
auto insurance, and enhances Kemper’s overall growth opportunities,
diversification, financial strength, and ability to serve
policyholders,” said Joseph P. Lacher, Jr., Kemper’s President and Chief
Executive Officer. “We look forward to welcoming the Infinity team to
the Kemper family and working together to deliver greater choice to our
policyholders through an expanded product offering and deeper
relationships with our agent networks, while generating strong returns
for our shareholders.”
Glen N. Godwin, Infinity Chief Executive Officer, added, “Together, our
two companies have a terrific strategic and cultural fit. As part of a
larger company, Infinity will have access to the capabilities and
resources necessary to drive accelerated growth and better serve our
policyholders and partner agents. In addition, Infinity shareholders
will benefit from immediate and certain value for their shares as well
as the opportunity to participate in the significant upside potential of
the combined company.”
Compelling Strategic and Financial Benefits
Increased Scale:
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Combined company will have a more diversified portfolio with
approximately $2.2 billion in nonstandard auto insurance premiums, an
expanded customer reach through deeper agency relationships and
greater efficiencies.
Broader Product Offering and Capabilities:
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Ability to leverage unique operational strengths, platforms,
analytical capabilities and demographic insights to provide a unique
set of products to our policyholders, while promoting growth of our
business.
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More diversified suite of products across auto, home, life, and health
insurance provides customers with greater choice at more competitive
prices.
Enhanced Financial Position:
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The transaction is expected to be accretive to Kemper’s EPS in the
first year, excluding Value of Business Acquired (“VOBA”) and one-time
items, and is expected to be accretive to year two EPS by more than
10%, excluding restructuring and one-time items. Additionally, we
expect the transaction to be accretive to return on average common
equity (“ROACE”) by more than 30bps and accretive to return on average
tangible common equity (“ROATCE”) by more than 400bps in year two
following close.
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More balanced revenue mix and enhanced cash flow increases financial
stability and provides additional resources to accelerate investments
in growth.
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Expected to result in annual pre-tax cost savings of approximately $55
million, and an additional $5 to $10 million of pre-tax earnings
resulting from the repositioning of Infinity’s investment portfolio.
These are expected to be fully phased in by the end of the second year
following close. These cost savings are expected to be achieved
through the consolidation of redundant corporate functions and the
optimization of the combined company’s systems, business processes and
reinsurance programs.
Transaction Details
Under the terms of the definitive merger agreement, Infinity
shareholders will receive $51.60 in cash and 1.2019 Kemper common shares
for each share of Infinity common stock. The transaction was valued at
approximately $1.4 billion, or $129.00 per Infinity share; the exchange
ratio for stock consideration to be issued in the merger is fixed and
was determined based on Kemper’s 20-trading day volume weighted average
price as of February 12, 2018 of $64.40. This represents an
approximately 33% premium to Infinity’s closing price of $97.05 as of
February 12, 2018. Based on Kemper’s February 12, 2018 closing stock
price of $57.75, the implied total consideration is approximately $1.3
billion, or $121.01 per Infinity share, an approximately 25% premium to
Infinity’s closing price of $97.05 as of February 12, 2018. The
agreement also contains an election procedure allowing each Infinity
shareholder to seek all cash or all stock, subject to proration and
adjustment. Following the close of the transaction, Infinity
shareholders are expected to own approximately 20% of the combined
company on a pro forma basis.
Kemper expects to fund the cash portion of the consideration with a
combination of cash on hand from the combined companies and other
internal resources. No additional financing resources are needed to
consummate the transaction, although Kemper may explore issuing an
institutional term loan prior to close of the transaction in order to
optimize its liquidity position.
The transaction is expected to close in the third quarter of 2018,
subject to the satisfaction or waiver of applicable closing conditions,
including the approval of shareholders of both companies and receipt of
required regulatory clearances and approvals.
Organizational Structure
Upon completion of the transaction, Infinity’s senior management team
will be integrated into the newly-combined organization. Additionally,
at closing, Kemper will increase its current Board of Directors by one
seat and select a Director from Infinity to join the Kemper Board of
Directors.
Advisors
Goldman Sachs & Co. LLC acted as financial advisor to Kemper and Sidley
Austin LLP served as legal counsel to Kemper. Deutsche Bank Securities
Inc. acted as financial advisor to Infinity and Keating Muething &
Klekamp PLL acted as legal counsel to Infinity.
Conference Call
Kemper will host a conference call to discuss the transaction tomorrow
at 8:30 a.m. Eastern time (7:30 a.m. Central time). The conference call
will be accessible via the internet and by telephone. The phone number
for the conference call is 844.526.3041. To listen via webcast, register
online at the investor sections of kemper.com
or ir.infinityauto.com at
least 15 minutes prior to the webcast to download and install any
necessary software.
A replay of the call will be available online at the investor
sections of kemper.com or ir.infinityauto.com.
About Kemper Corporation
The Kemper family of companies is one of the nation’s leading insurers.
With $8 billion in assets, Kemper is improving the world of insurance by
offering personalized solutions for individuals, families and
businesses. Kemper's businesses collectively:
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Offer insurance for home, auto, life, health and valuables
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Service six million policies
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Are represented by 20,000 agents and brokers
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Employ 5,550 associates dedicated to providing exceptional service
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Are licensed to sell insurance in 50 states and the District of
Columbia
Learn more about Kemper.
About Infinity Property and Casualty Corporation
Infinity Property and Casualty Corporation is a provider of personal and
commercial automobile insurance primarily meeting the needs and choices
of urban and Hispanic customers. Its products are offered through a
network of approximately 10,600 independent agencies and brokers. For
more information about Infinity, please visit http://www.infinityauto.com.
Cautionary Statements Regarding Forward-Looking Information
This press release may contain or incorporate by reference statements or
information that are, include or are based on forward-looking statements
within the meaning of the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
give expectations, intentions, beliefs or forecasts of future events or
otherwise for the future, and can be identified by the fact that they
relate to future actions, performance or results rather than relating
strictly to historical or current facts. Words such as “believe(s),”
“goal(s),” “target(s),” “estimate(s),” “anticipate(s),” “forecast(s),”
“project(s),” “plan(s),” “intend(s),” “expect(s),” “might,” “may,”
“could” and variations of such words and other words and expressions of
similar meaning are intended to identify such forward-looking
statements. However, the absence of such words or other words and
expressions of similar meaning does not mean that a statement is not
forward-looking.
Any or all forward-looking statements may turn out to be wrong, and,
accordingly, readers are cautioned not to place undue reliance on such
statements. Forward-looking statements involve a number of risks and
uncertainties that are difficult to predict, and are not guarantees or
assurances of future performance. No assurances can be given that the
results and financial condition contemplated in any forward-looking
statements will be achieved or will be achieved in any particular
timetable. Forward-looking statements involve a number of risks and
uncertainties that are difficult to predict, and can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties
that may be important in determining actual future results and financial
condition. The general factors that could cause actual results and
financial condition to differ materially from those expressed or implied
include, without limitation, the following: (a) the satisfaction or
waiver of the conditions precedent to the consummation of the proposed
merger transaction involving Kemper Corporation (the “Company”), a
wholly-owned subsidiary of the Company and Infinity Property and
Casualty Corporation (“Infinity”), including, without limitation, the
receipt of stockholder and regulatory approvals (including approvals,
authorizations and clearance by antitrust authorities and insurance
regulators necessary to complete such proposed merger transaction) on
the terms desired or anticipated (and the risk that such approvals may
result in the imposition of conditions that could adversely affect the
combined company or the expected benefits of such proposed merger
transaction); (b) unanticipated difficulties or expenditures relating to
such proposed merger transaction; (c) risks relating to the value of the
shares of the Company’s common stock to be issued in such proposed
merger transaction; (d) disruptions of the Company’s and Infinity’s
current plans, operations and relationships with third persons caused by
the announcement and pendency of such proposed merger transaction,
including, without limitation, the ability of the combined company to
hire and retain any personnel; (e) legal proceedings that may be
instituted against the Company and Infinity following announcement of
such proposed merger transaction; and (f) those factors listed in
annual, quarterly and periodic reports filed by the Company and Infinity
with the Securities and Exchange Commission (the “SEC”), whether or not
related to such proposed merger transaction.
The Company assumes no, and expressly disclaims any, duty or obligation
to update or correct any forward-looking statement as a result of
events, changes, effects, states of facts, conditions, circumstances,
occurrences or developments subsequent to the date of this press release
or otherwise, except as required by law. Readers are advised, however,
to consult any further disclosures the Company makes on related subjects
in its filings with the SEC.
Additional Information Regarding the Transaction and Where to Find It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. This communication is being made in respect of the
proposed merger transaction involving the Company, a wholly-owned
subsidiary of the Company and Infinity, among other things. The proposed
issuance of shares of Company common stock in connection with the
proposed merger transaction will be submitted to the stockholders of the
Company for their consideration, and the proposed merger transaction
will be submitted to the shareholders of Infinity for their
consideration. In connection therewith, the parties intend to file
relevant materials with the SEC, including a definitive joint proxy
statement/prospectus, which will be mailed to the stockholders of the
Company and the shareholders of Infinity. However, such documents are
not currently available. BEFORE MAKING ANY VOTING OR ANY INVESTMENT
DECISION, INVESTORS AND SHAREHOLDERS OF THE COMPANY AND/OR INFINITY ARE
URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS REGARDING
THE PROPOSED MERGER TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED
OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED MERGER TRANSACTION. Investors and shareholders may obtain
free copies of the definitive joint proxy statement/prospectus, any
amendments or supplements thereto and other documents containing
important information about each of the Company and Infinity, once such
documents are filed with the SEC, through the website maintained by the
SEC at www.sec.gov. Copies of the
documents filed with the SEC by the Company will be available free of
charge under the “Investors” section of the Company’s website located at http://www.kemper.com
or by contacting the Company’s Investor Relations Department at
312.661.4930 or investors@kemper.com.
Copies of the documents filed with the SEC by Infinity will be available
free of charge under the “Investor Relations” section of Infinity’s
website located at http://www.infinityauto.com
or by contacting Infinity’s Investor Relations Department at
205.803.8186 or investor.relations@infinityauto.com.
Participants in the Solicitation
The Company and Infinity, and their respective directors and executive
officers, certain other members of their respective management and
certain of their respective employees, may be deemed to be participants
in the solicitation of proxies in connection with the proposed merger
transaction. Information about the directors and executive officers of
the Company is set forth in its annual report on Form 10-K for the
fiscal year ended December 31, 2016, which was filed with the SEC on
February 13, 2017, and its proxy statement for its 2017 annual meeting
of stockholders, which was filed with the SEC on March 24, 2017, and
information about the directors and executive officers of Infinity is
set forth in its proxy statement for its 2017 annual meeting of
shareholders, which was filed with the SEC on April 11, 2017, and its
annual report on Form 10-K for the fiscal year ended December 31, 2016,
which was filed with the SEC on February 28, 2017, each of which can be
obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the definitive joint proxy
statement/prospectus and other relevant materials to be filed with the
SEC when they become available.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180213006637/en/
Contact - Kemper
News Media:
Barbara
Ciesemier
312.231.3604
bciesemier@kemper.com
or
Investors:
Todd
Barton
312.661.4930
investors@kemper.com
or
Contact
– Infinity
Investors:
Amy Jordan
205.803.8186
Amy.jordan@ipacc.com
Source: Kemper Corporation