Mapfre’s $1.54 billion takeover of Safety Insurance Group has cleared two of its last three hurdles. Only regulators now stand between the deal and closing.
The Spanish insurer raised €1 billion in two bond issues: a three-year €500 million senior tranche priced at 3.875%, and a €500 million Tier 2 subordinated tranche maturing in 2041 with a 4.875% coupon.
The issues drew combined demand of more than €5.7 billion from over 150 institutional investors, five and 6.4 times the amounts issued, which allowed Mapfre to tighten pricing by more than 30 and 35 basis points respectively. It is Mapfre’s third trip to the debt markets this year, after a €1 billion senior issue in January and a €500 million Tier 2 bond in June.
The financing follows a vote on November 3 in which Safety shareholders approved the merger, with more than 11.29 million shares voting for it and fewer than 13,000 against. The deal still needs approval from the Massachusetts commissioner of insurance and clearance under the Hart-Scott-Rodino antitrust waiting period. Mapfre expects it to close in the first quarter of 2027.
Under the agreement announced in July, a Mapfre USA subsidiary will merge with Safety, which will become a wholly owned subsidiary of Mapfre USA and keep operating under its own name. Safety shareholders will receive $105 a share in cash, a 44% premium to the stock’s price before the announcement. Safety writes private passenger auto, homeowners and commercial auto in Massachusetts, Maine and New Hampshire. Mapfre already writes in Massachusetts through its Commerce Insurance brand, and says the combined group will be New England’s largest homeowners and commercial auto insurer and second-largest writer of private passenger auto.
Mapfre’s balance sheet supports the deal. It reported a Solvency II ratio of 208.8% at the end of the first half, and its US operation posted its best-ever nine-month result in October. Fitch rates the group A with a stable outlook, and S&P upgraded it to A this year.
For independent agents, distribution will be the biggest change. Safety works with about 800 independent agents and Mapfre with about 3,000 in the region, as IB reported in September. Agents who represent both carriers will soon place much of their Massachusetts book with a single group. Appetite, commission terms and contract continuity are the questions to raise before closing.
