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Progressive (PGR) Inks Deal to Acquire Protective Insurance
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The Progressive Corporation (PGR - Free Report) has inked a deal to acquire Protective Insurance Corporation for $338 million in cash.
Pending regulatory conditions, which include the receipt of certain required regulatory approvals and approval of Protective’s Class A shareholders, the deal is expected to close by the end of the third quarter. The board of directors of Protective unanimously approved the deal.
About Protective Insurance
Carmel-based Protective Insurance, the area’s 12th-largest public company, has a decades-long heritage of providing insurance for fleet trucking operations and specializing in workers’ compensation insurance for transportation-focused businesses.
Founded in 1930, Protective Insurance Corp. is the publicly-traded holding company for several property/casualty insurance subsidiaries which provide liability and workers’ compensation coverage for trucking and public transportation fleets of all sizes, along with trucking industry independent contractors.
Financing the Deal
Progressive has agreed to pay $23.30 per share in cash for a total transaction value of approximately $338 million. The per share price represents a respective 49.1% premium and 63.2% premium to Protective’s Class A and Class B share price as of Feb 12, 2021. The buyout is projected to be funded through liquid investments on hand.
Rationale Behind the Deal
The acquisition is expected to boost Progressive’s Commercial Lines product portfolio with additional product lines, and strengthen its capabilities. Progressive provides insurance for personal and commercial autos and is one of the top 15 homeowners insurance carriers.
Its Commercial Lines business operates in five traditional business markets, including business auto, for-hire transportation, contractor, for-hire specialty, and tow markets and is primarily written through the agency channel. This business represented 13.1% of total net premiums written in 2020.
The deal is expected to enhance workers’ compensation coverage for the transportation industry, which accounts for a major portion of Commercial Lines premiums growth. The buyout will also enable the insurer to meet the requirements of commercial customers.
In 2019, the property and casualty insurer expanded its participation in the transportation business, where it provides commercial auto coverage. At present, Progressive provides this coverage to Uber Technologies’ subsidiaries in 13 states and to Lyft’s rideshare operations in three states. The transportation industry is a growing and important part of business yielding satisfactory profits.
As far as Protective is concerned, this deal will provide it with more opportunities to grow as part of a more diversified organization. Moreover, the shareholders of Protective will receive immediate cash premium.
In the past year, shares of this Zacks Rank #3 (Hold) insurer have gained 2.1% against the industry’s 1% decline.
Alleghany’s bottom line surpassed estimates in two of the last four quarters (missed in the other two), the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
Arch Capital surpassed estimates in three of the last four quarters, with the average earnings surprise being 32.14%.
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Progressive (PGR) Inks Deal to Acquire Protective Insurance
The Progressive Corporation (PGR - Free Report) has inked a deal to acquire Protective Insurance Corporation for $338 million in cash.
Pending regulatory conditions, which include the receipt of certain required regulatory approvals and approval of Protective’s Class A shareholders, the deal is expected to close by the end of the third quarter. The board of directors of Protective unanimously approved the deal.
About Protective Insurance
Carmel-based Protective Insurance, the area’s 12th-largest public company, has a decades-long heritage of providing insurance for fleet trucking operations and specializing in workers’ compensation insurance for transportation-focused businesses.
Founded in 1930, Protective Insurance Corp. is the publicly-traded holding company for several property/casualty insurance subsidiaries which provide liability and workers’ compensation coverage for trucking and public transportation fleets of all sizes, along with trucking industry independent contractors.
Financing the Deal
Progressive has agreed to pay $23.30 per share in cash for a total transaction value of approximately $338 million. The per share price represents a respective 49.1% premium and 63.2% premium to Protective’s Class A and Class B share price as of Feb 12, 2021. The buyout is projected to be funded through liquid investments on hand.
Rationale Behind the Deal
The acquisition is expected to boost Progressive’s Commercial Lines product portfolio with additional product lines, and strengthen its capabilities. Progressive provides insurance for personal and commercial autos and is one of the top 15 homeowners insurance carriers.
Its Commercial Lines business operates in five traditional business markets, including business auto, for-hire transportation, contractor, for-hire specialty, and tow markets and is primarily written through the agency channel. This business represented 13.1% of total net premiums written in 2020.
The deal is expected to enhance workers’ compensation coverage for the transportation industry, which accounts for a major portion of Commercial Lines premiums growth. The buyout will also enable the insurer to meet the requirements of commercial customers.
In 2019, the property and casualty insurer expanded its participation in the transportation business, where it provides commercial auto coverage. At present, Progressive provides this coverage to Uber Technologies’ subsidiaries in 13 states and to Lyft’s rideshare operations in three states. The transportation industry is a growing and important part of business yielding satisfactory profits.
As far as Protective is concerned, this deal will provide it with more opportunities to grow as part of a more diversified organization. Moreover, the shareholders of Protective will receive immediate cash premium.
In the past year, shares of this Zacks Rank #3 (Hold) insurer have gained 2.1% against the industry’s 1% decline.
Stocks to Consider
Some better-ranked stocks from the same space are Alleghany , Cincinnati Financial Corporation (CINF - Free Report) and Arch Capital Group (ACGL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alleghany’s bottom line surpassed estimates in two of the last four quarters (missed in the other two), the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
Arch Capital surpassed estimates in three of the last four quarters, with the average earnings surprise being 32.14%.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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