Progressive To Buy Major Stake In ARX Holding

(RTTNews) - Progressive Corp. (PGR) Tuesday announced plans to increase its stake in ARX Holding Corp., the parent company of American Strategic Insurance, to 67 percent for $875 million in cash. The auto insurer will buy the remaining stake in ARX over the next six years, as the company aims to improve its home insurance offerings.

Progressive will increase its ownership stake in ARX Holding to 67 percent from the 5 percent stake held since 2012. The transaction is expected to close by April 1, 2015, subject to customary closing conditions.

"Progressive is committed to becoming the insurance destination brand for consumers," said CEO Glenn Renwick. "As such, we need the reliable availability of many more products than we intend to manufacture."

American Strategic Insurance offers coverage in 26 states plus the District of Columbia and writes more than $1 billion of premium and maintains over $550 million in surplus.

Separately, as part of the deal, XL Group Plc (XL) announced in a SEC filing that it is selling its 39.7 percent stake in ARX to Progressive. XL will get proceeds of about $500 million.

PGR is currently trading at $25.68, down $0.56 or 2.12%, on the NYSE.