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Spanish insurer to purchase Commerce Insurance

Spain’s largest insurance company tonight offered to pay $2.2 billion in cash for Commerce Group Inc. and plans to use the Webster insurer as its platform for growth in the United States.

The boards of both companies approved the deal today. It calls for Mapfre SA of Madrid to pay Commerce shareholders $36.70 a share, which is $5.58, or 18 percent, above the company’s closing price yesterday. The deal must still be approved by regulators and Commerce shareholders.

The deal would mark the loss of yet another major Massachusetts company, many of which have been swallowed in recent years by larger companies from outside the state and country. Examples include Gillette Corp., which was acquired by Procter & Gamble, and Fleet Financial Corp., which was purchased by Bank of America.

Commerce is known primarily as a Massachusetts company, although it has diversified outside the state in recent years by expanding into New York, California, Oregon, Ohio, and 12 other states.

Commerce insures more than one-third of all vehicles in Massachusetts and offers special discounts to members of the American Automobile Association. It has been a major force in state politics, funneling employee and director contributions to state politicians it favors and opposing until very recently efforts to revamp the state’s heavily regulated auto insurance system.

James Ermilio, the Commerce legal counsel, said Mapfre intends to use Commerce as its primary vehicle for expansion in the United States.

‘‘They want to expand across the US, and they’ve selected us as their platform,’’ Ermilio said. ‘‘It puts us in an even stronger position.’’

Mapfre is Spain’s largest insurer and operates in 40 countries. It already sells insurance through a US subsidiary in Florida, New Jersey, and Puerto Rico, and also operates a roadside assistance operation throughout the country. Mapfre also has major operations in Latin America.

Once the acquisition of Commerce is completed, Mapfre said, its US business will account for about 10 percent of its total premiums.

Officials had no comment on whether there would be layoffs at Commerce in the wake of the acquisition, although the plans to expand nationwide would indicate staff cutbacks would be unlikely. Commerce employs nearly 2,200 workers, and nearly all of its policies are written by independent agents.

The company, located in tiny Webster south of Worcester, began operating in Massachusetts in 1971 and in the late 1990s became the state’s dominant automobile insurer on the strength of attractive discounts it offered to AAA members. The company was run initially by Arthur J. Remillard Jr., who resigned in July 2006 and was replaced by chief financial officer Gerald Fels, who had worked side-by-side with Remillard for nearly 30 years.

During the first nine months of this year, Commerce reported net earnings of $171.4 million, down from $182 million during the same period last year. By contrast, Mapfre reported net income of $484.6 million in the first half of the year, up 11.7 percent from the same period a year before.

Bruce Mohl can be reached at mohl@globe.com.

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