Phenix Mutual, Motorists Mutual
Concord, New Hampshire-based Phenix Mutual Fire Insurance Co. announced that it will become an affiliate of The Motorists Insurance Group, upon approval by regulators in New Hampshire and Ohio, where Motorists is headquartered.
Phenix, which operates in New Hampshire, Maine, Vermont, Massachusetts, Rhode Island and South Carolina, had $26.5 million in direct and assumed written premium last year.
As part of the agreement, Phenix will pool its premium, losses and underwriting expenses with other companies in the group.
John J. Bishop, chairman, president and chief executive officer of Motorists, said Phenix Mutual has enjoyed a “long-term market presence with a loyal agency force in its operating states, most of which represent new markets and significant future growth opportunities for The Motorists Insurance Group.”
The Hartford Financial Services Group Inc. is trying to sell its property casualty insurance business, as it reels from massive losses and has retained Goldman Sachs to help facilitate a deal, according to Reuters.
Possible contenders for the business could include German insurer Allianz, which is already an investor, MetLife, Munich Re and Travelers. It was not clear whether any of these companies had been approached, however.
Hartford’s P/C business is worth about $8 billion on paper, based on the company’s financial statements filed with regulators, according to a February note issued by Citigroup analyst Joshua Shanker. But getting that price could be difficult, because capital and loan markets have been difficult to tap, reducing the capacity of bidders to pay. An insurer such as Travelers, with a market capitalization of about $23 billion, could have trouble raising enough debt and equity to pay for a deal, a source said.
Allianz made a $2.5 billion investment in Hartford last October, giving it a stake, and the ability to raise its ownership in future. And Allianz could also be better situated to pay for the business, a source said. However, Sabia Schwarzer, a spokeswoman for Allianz of America, said the “investment in the Hartford is purely financial, not strategic.” She declined to comment further.
Goldman spokeswoman Andrea Rachman declined to comment, as did Travelers and MetLife. Hartford could not immediately be reached and Munich Re spokeswoman Johanna Weber also declined to comment.
The development comes amid large losses for the 199-year-old company. Hartford, a large writer of a popular retirement product called variable annuities, has been badly battered by investment losses and higher costs from guarantees on these annuities, which are linked to stock market performance.
It had a net loss of $2.75 billion in 2008, reversing a net profit of $2.95 billion the previous year. Earlier media reports said Hartford was trying to sell parts of its life insurance unit to Canada’s Sun Life Financial Inc., but Bloomberg reported those talks ended without a deal. Hartford’s shares are down some 40 percent so far this year.
Auto Club, MEEMIC
Auto Club Insurance Association, a Dearborn, Mich.-based insurer (ACIA), has acquired MEEMIC Insurance Company (MEEMIC) and its insurance agency affiliate, MEEMIC Insurance Services Corporation.
ACIA offers a full range of personal lines insurance products and services through a network of 725 captive agents and more than 1,000 independent agents located throughout the Midwest. It is an affiliate of AAA Auto Club Group, which provides membership, travel, and financial services to more than 4.1 million members in Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, and Wisconsin.
Headquartered in Auburn Hills, Mich., MEEMIC provides auto, homeowners, boat, and umbrella insurance to employees of educational institutions and their families. Its workforce includes approximately 130 employees and a network of more than 70 captive agents primarily serving customers in Michigan. It was previously owned by GMAC Financial Services and its affiliates (GMAC).
Steven D. Monahan, who most recently served as president and chief operating officer of ACIA, was appointed as the new president and chief executive officer of MEEMIC. Under his leadership, MEEMIC will be managed separately as a wholly-owned subsidiary of ACIA and continue to operate under the MEEMIC name.
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