State Farm invests $1.2 billion in ADT

State Farm is making a $1.2 billion equity investment in ADT, resulting in the insurer owning approximately 15% of the home and business security company. In addition, State Farm will invest up to $300 million in ADT to fund product and technology innovation, customer growth and marketing.

As part of this new partnership, and by building upon ADT’s existing relationship with Google, the companies will combine “next-generation security, innovative smart home technology and reimagined risk-mitigation capabilities” to monitor, detect, help prevent and optimize against homeownership risks.

Google has separately agreed to commit an incremental $150 million, subject to the achievement of certain milestones, to advance opportunities created by this type of innovation, raising its total success fund commitment to $300 million.

“As the industry leader, we’ve always recognized our responsibility to go beyond insurance and find ways to build stronger and safer communities for our customers and the neighborhoods we serve. This partnership with ADT gives State Farm the opportunity to provide Smart Home technology that takes us from our ‘repair and replace’ model to a ‘predict and prevent’ mindset. These innovations will help us take the next step into the future of home insurance and add more value for our customers.” – Paul Smith, Chief Operating Officer at State Farm.

“ADT’s partnership with State Farm creates the capability to drive innovation in homeowners insurance on a broad scale. By delivering a truly connected home, together we can improve the customer experience and provide more peace of mind. These new and expanded partnerships represent another bold step forward for our company and provide ADT more avenues to grow our customer base, strengthen brand loyalty and lower customer acquisition costs.” – Jim DeVries, ADT President and CEO.

Bottom Line: Going beyond insurance is a trending strategy.