Folksamerica Buys Majority Stake in Esurance.

Folksamerica Holding Co. said it had acquired a majority interest in Esurance Inc., an Internet-based personal-lines insurance company. Financial terms of the agreement were not disclosed.

Esurance, a quote-to-claims provider, will become a subsidiary of San Francisco-based Folksamerica, staying independent and continuing to offer personal auto insurance in 24 states through its online service.

In September, Esurance laid off about one-quarter of its staff and put some new projects on hold in preparation for a possible merger or acquisition, said a company spokesman who noted at that time that the company was in negotiations with several companies on a possible merger deal.

Steven Fass, chief executive officer of Folksamerica Holding Co., said in a statement that Esurance represents a "promising new direct model" for the insurance industry "The Internet is still an emerging distribution channel for insurance, and Esurance is a leader in this growing space," he said. "The company has one of the few Internet-based models that delivers on the promise of technology, which is to reduce costs," and provide convenience.

Esurance cited a report from Forrester Research projecting that auto insurance sales over the Internet would reach an estimated $11.8 billion by 2004 and account for 90% of the total online property/casualty insurance sales.

Folksamerica is a subsidiary of White Mountains Insurance Group, which in September agreed to buy CGU Corp. from CGNU plc for $2.06 billion and with strong backing from billionaire Warren Buffett.