The Progressive Corp. will acquire Indiana-based trucking industry insurer Protective Insurance Corp. for $338 million in cash – a move that will increase its stake in the commercial lines insurance market.

Progressive per share price of $23.30 represents a 49.1 percent premium and 63.2 percent premium, respectively, to Protective’s share prices as measured on February 12, 2021. The acquisition is expected to close by the end of the 2021 third quarter.

As well, Progressive said it plans to maintain Protective’s offices in Carmel, Indiana and retain Protective’s employees.

Protective Insurance Corp., founded in 1930, is the publicly-traded holding company for several property/casualty insurance subsidiaries including Protective Insurance Co., Sagamore Insurance Co. and Protective Specialty Insurance Co. The subsidiaries provide liability and workers’ compensation coverage for trucking and public transportation fleets of all sizes, along with trucking industry independent contractors.

In May, Protective Insurance Corp. reported that a special committee of independent directors has been formed to evaluate a sale agreement offered by certain shareholders and other parties. The offering parties were not identified.

Protective Insurance Co. is licensed in 50 states, the District of Columbia, Puerto Rico and all Canadian provinces and provides coverage for trucking fleets of all sizes.

Sagamore is licensed in 49 states and provides commercial auto coverage to small trucking fleets and artisan contractors, and workers’ compensation coverage to small and medium-sized transportation-focused businesses via the independent agency system.

Protective Specialty provides excess and surplus lines products in 48 states.

Through the end of nine months of 2020, Protective reported net premiums written were at $320 million and a net loss of $7.4 million, reflecting in part the effects of the pandemic on the trucking sector. The third quarter itself saw improvements — net income of $3.3 million– due to actions taken to improve underwriting results, including non-renewal of unprofitable business and significant rate increases in commercial automobile, according to Jeremy Johnson, Protective’s CEO.

For full year 2019, Protective reported net premiums written of $447 million and net income of $7.4 million with a 106.80 combined ratio. Premium growth in 2019 was only 1.8 percent compared with 26 percent in 2018, 30 percent in 2017 and 7 percent in 2016.

But “given ongoing profitability challenges,” CEO Johnson announced the insurer would discontinue writing new public transportation business effective the fourth quarter of 2020.

The move allows Progressive to add products for larger fleets and brings expertise in workers’ compensation coverage for the transportation industry, which are new areas of business for Progressive.

“As a leader in commercial auto insurance, we’re excited to expand our capabilities with the expertise Protective offers in larger fleet and affinity programs and by providing additional product lines for us to add to our portfolio,” said Karen Bailo, Commercial Lines president for Progressive.

According to 2018 figures from the National Association of Insurance Commissioners, Progressive is the largest commercial auto insurance writer with about an 11 percent share of the market, followed by Travelers, Liberty Mutual, Nationwide and Berkshire Hathaway.

*A version of this story ran previously in our sister publication Insurance Journal.