Mercury General Corp., the auto insurer majority-owned by two elderly shareholders, is a likely takeover target because of its 9.7 percent market share in California, a Credit Suisse Group analyst said, Bloomberg News reports.
The Los Angeles-based company’s sales network is “perhaps the state’s strongest,” analyst Charles Gates said in a note to investors today. “This asset is coveted by many” and more than half Mercury’s stock is owned by George and Gloria Joseph, who are over 80 years old, Gates said. A takeover is likely “in the coming years” by a large property and casualty insurer, he said.
Companies are competing for a bigger slice of the $160 billion in U.S. annual auto-insurance premiums because homeowners insurance is expected to be less profitable with recurrent natural disasters. Last year, American International Group Inc., the world’s largest insurer by assets, bought auto insurer 21st Century Insurance Group and Spain’s Mapfre SA agreed to buy U.S. auto insurer Commerce Group Inc.
