Mercury General Corporation announced that Mercury Casualty Company, its largest insurance subsidiary, has entered into a definitive agreement with Aon Corporation for the purchase of Auto Insurance Specialists Inc. (AIS).AIS is a major producer of automobile insurance in the state of California and the Company's largest independent broker producing over $400 million of direct premiums written, which represented 14% of the Company's direct premiums written during 2007. The transaction is expected to close in the first quarter of 2009.
The purchase price of the transaction is $120 million plus a potential earn out of up to $34.7 million, payable over the two year period following the transaction closing date. The company plans to finance the purchase through a term loan, the terms of which are under negotiation. The company expects the acquisition to be slightly accretive to earnings.
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