Liberty Mutual acquiring Safeco

As I reported last week, the softening market will inevitably lead to a significant increase in the number of mergers. Add another deal to the list.
In a deal just announced, Liberty Mutual is buying Safeco, the Seattle-based P&C carrier, for $6.2 billion in cash. The transaction is valued at $68.25 a share, and marks the second major acquisition by Liberty in the last few months.
Safeco will be part of Liberty’s Agency Markets business, a venture that was initiated by Liberty Chairman Ted Kelly several years ago. Prior to that, Liberty was a direct writer, and only sold thru its captive sale force (disclosure – I sold for LM for several years). The Agency Markets unit has been quite successful in helping Liberty land clients that would not buy direct, but had strong relationships with brokers.
Safeco joins America First, Indiana Insurance, Montgomery, Ohio Casualty, Peerless, Colorado Casualty, Golden Eagle, and Liberty Northwest as well as Wausau and Summit Holding.
The current financial state of the P&C market makes it highly likely, and I would even say inevitable, that more deals get done, and soon. There is more capital out there than places to park it, and with organic growth difficult and very expensive (the market is soft enough, and even Liberty can’t keep cutting prices forever) insurers looking to grow are going to have to do so thru acquisition.