Safety Insurance Group, in merger pact with Mapfre for $1.54B

Safety Insurance Group, Inc. has entered into a merger agreement with Spanish insurance giant MAPFRE to acquire the U.S. insurer The Commerce Group for $1.54 billion (€1.538 billion). The transaction, announced in October 2007, marked a significant milestone in MAPFRE’s international expansion strategy and largest investment in history. Under the terms of the agreement, COMMERCE shareholders will receive $36.70 per share, a 22.5% premium over the 30-day average share price.

The Commerce Group, a leading provider of non-life insurance in Massachusetts, operates in 17 U.S. states and holds licenses in all 50. It is the 20th largest motor insurer in the U.S., with approximately $1.9 billion in annual premiums. The acquisition is expected to enhance MAPFRE’s presence in the U.S. market and diversify its geographic and currency exposure. The transaction is subject to regulatory approvals and shareholder consent.

MAPFRE, the largest insurance group in Spain, has a global presence in 43 countries and reported over €730 million in net earnings in 2007. The integration of COMMERCE is expected to strengthen MAPFRE’s distribution network and underwriting capabilities in the U.S.