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(Berkeley Heights, NJ) – The Palisades Group, a leading provider of auto insurance in New Jersey, announced today that it has agreed to acquire The Prudential Property and Casualty Insurance Company of New Jersey (PRUPAC-NJ), the New Jersey property and casualty unit of Prudential Financial, Inc. (NYSE: PRU). The transaction is valued at approximately $260 million, including return of capital of about $230 million and cash and a note from the purchaser. The acquired company, which represents 8 percent of New Jersey's auto insurance market and 10 percent of the state's homeowners market, will operate as a separate New Jersey-based company with its own management team and employees and an exclusive distribution agreement with Prudential. Regulatory filings will be completed shortly and submitted to the New Jersey Department of Banking and Insurance.
As structured, this transaction will help ensure stability and continuity in New Jersey's insurance market. The Department's approval of the acquisition will not result in changes to PRUPAC-NJ policyholders' rates, coverages, and policies, and consumers will continue to have the same degree of access to auto and homeowners insurance in New Jersey. Palisades has also agreed to extend employment offers to most of the current PRUPAC-NJ employees, as well as many other PRUPAC Corporate employees, preserving hundreds of New Jersey jobs. Additionally, the Palisades Group has entered into a strategic partnership with Homesite, a leading homeowners insurance provider. Under the arrangement, Homesite will write new homeowners insurance policies through Prudential agents under an exclusive distribution agreement with Prudential. Current PRUPAC-NJ homeowners insurance policies will continue to be maintained and renewed by Palisades' newly acquired company. At the conclusion of this transaction, New Jersey consumers will continue to enjoy broad access to auto and homeowners insurance options at competitive rates.
Commenting on the acquisition of PRUPAC-NJ, Palisades Group President and Chief Executive Officer Gerald Wilson said, "This is a significant step forward for the Palisades Group, its customers, agents, and employees. We are acquiring a well-managed and successful business, and in return we'll help maintain stability in New Jersey's dynamic insurance market by preserving hundreds of thousands of existing auto and homeowner insurance policies. We are also ensuring availability of coverage by maintaining an expansive network of agents across New Jersey, where Palisades and PRUPAC-NJ customers can continue doing business with the same trusted agents they've always known. Additionally, we are excited to be establishing our relationship with Homesite, an existing affinity partner of Prudential in 16 states across the nation. Most importantly, we are keeping jobs right here in the Garden State. This is a winning proposition for everyone touched by this transaction."
Speaking today about the transaction, Hal Belodoff, a co-founder and Chairman of the Palisades Group said, "This is a great day for Palisades. We started this company with a simple idea to provide high quality insurance coverage to safety-conscious New Jersey drivers at an affordable cost with superior customer service and a special relationship with agents who placed their trust with us. Together with our partner agents we have become a leading provider of auto insurance in the State of New Jersey. We are looking forward to maintaining the strong relationships we have built over the last 10 years with our current customers, agents, and employees and to building new relationships that will last a lifetime."
"We are very encouraged by the commitment of the McGreevy administration and the Commissioner to a stable auto insurance market in New Jersey, making us even more confident in increasing our investment in the state," added Wilson.
"We have achieved tremendous growth in only ten years," Mr. Wilson said. "Our employees and our more than 130 agents across New Jersey are the foundation of this company, and we are proud to expand our family today with the addition of knowledgeable and hardworking employees and agents from PRUPAC-NJ."
The Palisades Success Story
Established in 1992, Palisades entered the state in difficult times and has continually grown its capital base and financial strength through dedication to the market and delivering excellent customer service. As a result, the company has become a leading auto insurance carrier in New Jersey. Palisades enjoys a B++ (Very Good) rating by A.M. Best, the world's oldest and most authoritative insurance rating and information source, placing it among the leaders of New Jersey domestic auto insurers. Palisades has a long track record of success in New Jersey's continually evolving insurance market. A key driver behind Palisades' success is its core value of excellent service to its customers and its agents.
The company works with agents across New Jersey, touching communities in all of the state's 21 counties. As a result of today's transaction, through which Palisades will work diligently to maintain and enhance relationships with its existing and Prudential agents, the company greatly extends its presence into New Jersey communities and ensures the continued availability of coverage to the state's consumers. The transaction will not result in a diminution of auto and homeowners insurance outlets for consumers to purchase coverage.
"The relationships we have built with our agents are a hallmark of our success," Mr. Wilson said. "Agents are our lifeline to our customers, and as we enhance relationships with agents, we likewise do so with our customers."
"We are proud of the role we have played throughout our history of promoting stability in the New Jersey insurance marketplace," said Wilson.
"As we contemplated this transaction, we went through extraordinary measures to preserve the Palisades and PRUPAC-NJ cultures. Each company's success is rooted in the strength of its management focus and agent relations," Mr. Wilson said. "We deliberately chose not to merge the companies because we wanted to preserve each company's respective way of doing business. This will maintain continuity and stability for consumers, agents, and employees, and will allow each company to continue focusing on the things that have made it a success in the past."
Keefe, Bruyette & Woods, Inc. is acting as financial advisor to Palisades in this transaction.
About the Palisades Group
Headquartered in Berkeley Heights, New Jersey, Palisades is one of the leading writers of auto insurance for New Jersey residents through its two companies Palisades Safety & Insurance Company and Palisades Insurance Company. Palisades has achieved growth by focusing on delivering the highest level of customer service to members and agents, as well as maintaining a strong local focus.
About Prudential Financial, Inc.
Prudential Financial companies, with approximately $550 billion in total assets under management and administration as of March 31, 2003, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. These companies offer a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services. For more information, visit http://www.prudential.com.