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The deal, expected to close in the first quarter of 2009, includes a potential $34.7 million earn-out payable over two years, the companies said in separate statements.
The transaction includes business transacted by Auto Insurance Specialists Inc., PoliSeek and Aon Recreation Insurance brands. The three brokers specialize in providing personal automobile and other personal lines in California.
Los Angeles-based Mercury General Group (NYSE: MCY) is the third-largest seller of private passenger auto coverage in California, according to A.M. Best?s state/line data, with 9.8% of market share.
Aon (NYSE: AOC | Quote | Chart | News | PowerRating) said the deal is part of its drive to focus on risk management and brokering commercial lines and reinsurance, and human capital consulting. A major move in that plan was the sale of Aon?s health and life insurance companies, Combined Insurance Co. and Sterling Life Insurance Co., last year (BestWire, Dec. 26, 2007).
Aon is the largest broker in the world with $6.1 billion in 2007 brokerage revenue, according to the Best?s Review ranking of global brokers.
The other companies among the five largest sellers of private passenger auto coverage in California, according to the A.M. Best data, are: State Farm Group, with 12.3% of market share; Farmers Insurance Group, 10.9%; Allstate Insurance Group, 9.1%; and Auto Club Enterprises Insurance Group, 8.9%.
In afternoon trading on Oct. 15, shares of Aon Corp. were $38.77, down 3% from the previous close, and shares of Mercury Insurance Group were $47.76, down 7.42% from the previous close.
(By Alyn Ackermann, senior associate editor, BestWeek: Alyn.Ackermann@ambest.com)
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