NEW YORK (AFP) — Liberty Mutual Group struck a deal to acquire rival Safeco for some 6.2 billion dollars, to form the fifth largest property and casualty insurer in the United States, the firms said Wednesday.

The companies said Liberty would acquire all outstanding shares of Safeco for 68.25 per share in cash. The deal has been approved by the boards of both companies and needs Safeco shareholder and regulatory approvals.

Currently, Liberty Mutual Group is the sixth largest US insurer with premiums of 20.2 billion dollars, while Safeco had 2007 direct written premiums of 5.9 billion.

“The addition of Safeco significantly expands and strengthens the Liberty Mutual Group,” said Edmund Kelly, president and chief executive of Boston-based Liberty.

Paula Reynolds, president and CEO of Seattle, Washington-based Safeco, said, “This is the opportunity to take West Coast inventiveness and launch it with a global brand at a substantial premium to Safeco shareholders.”