OneBeacon Transfers P&C Business to Liberty Mutual

By | September 24, 2001

The next challenge is to educate independent agents in those respective markets about the value of the Liberty Mutual brand and how this helps everyone.”

That was the response of a company spokesman from Liberty Mutual Group following the announced partnership between Liberty Mutual and OneBeacon, a wholly owned subsidiary of White Mountains Insurance Group.

With an agreement in principle earlier this month, OneBeacon agreed to transfer its property and casualty business, along with its staff and operations in 42 states and the District of Columbia, to Liberty Mutual. As part of the deal, OneBeacon’s $1.5-billion book of personal and commercial accounts, along with nearly 2,600 of the employees in those areas, are being added to Liberty Mutual’s Regional Agency Markets business unit.

The announcement came before the events of Sept. 11, from which OneBeacon Insurance Group will see some losses. The company reported on Sept. 14 that it expects maximum losses of $175 million from the destruction of the World Trade Center.

OneBeacon, formerly the U.S. property-casualty operations of British insurer CGNU, which White Mountains bought earlier this year, was the sixth U.S. or Bermuda-based insurer to acknowledge large exposure to what is likely to be the largest ever insured event.

The transaction with Liberty Mutual is contingent upon the parties entering definitive agreements. According to the proposed deal, Liberty Mutual will begin the orderly movement of the business, operations and staff immediately and will take on all new and renewal business starting Nov. 1 of this year. OneBeacon will remain active in future results of this and other Liberty Mutual business for up to five years through reinsurance deals.

The move makes Boston-based Liberty Mutual Group one of the biggest organizations of regional insurance operations in the U.S. that is solely centered on independent agents. OneBeacon aims to benefit from the solid financial backing that Liberty Mutual will bring to the partnership.

According to Maggie Sheehan, senior communications specialist for OneBeacon, the move seemed like a good opportunity to management.

“We realized the New England and northeastern states—New York and New Jersey—are our strongest areas, so it was time to concentrate on them and focus our energies there,” Sheehan said. “I would think (my own personal view) the agents who understand the company will see this as positive. Certainly in terms of the business that is Liberty-bound, the agents would wonder if that would continue and how Liberty will service that business. For those in New England and the northeast states, they’ll want to know what our focus and appetite is as far as our underwriting interests and how we plan to continue to service this business.”

In a unique twist, where the partnership doesn’t apply, OneBeacon and Liberty Mutual will continue to compete, specifically in the Northeast where Liberty Mutual operates a regional business known as Peerless Insurance. Peerless Insurance was founded in 1901 and became part of the Liberty Mutual family in 1999.

“In the Northeast, we will definitely compete with them,” Sheehan said. “It will make life interesting, at least in this area, having two strong companies. That is definitely good for the consumer and the agent.”

Rich Angevine, a spokesman for Liberty Mutual, confirmed that OneBeacon and Liberty Mutual will compete in the Northeast.

“It [Peerless] is based in New Hampshire and will continue to compete with OneBeacon as it had in the past,” Angevine commented. “There are other pockets—I believe it is New York and New Jersey—where OneBeacon is keeping an active presence in that market and those accounts and agents were not transferred over to Liberty Mutual.”

Angevine noted that San Diego’s Golden Eagle would be impacted by the partnership. Calls to Golden Eagle had not been returned at press time.

“California is one of the 42 states in which the OneBeacon business and agents would have the opportunity to pass to Liberty Mutual,” Angevine commented.

According to Angevine, the next step is to explain to independent agents the value of this partnership.

“Over the next couple of months, the key is for Liberty Mutual and OneBeacon, which has a financial stake in this, to go forward and explain to everyone that this is a great situation and therefore, we anticipate the bulk of the business to come on over, but there is no guarantee. We’ve always viewed OneBeacon as a strong partner.

“Essentially what is happening is that OneBeacon was a national insurer that wrote business, small, commercial and personal lines across the country. Liberty Mutual has an area of our company that does the same thing. This is an opportunity for us to grow that portion of our business very quickly by acquiring OneBeacon policies, operations and staff in 42 states plus the District of Columbia. We gained by quickly being able to access and grow our portion of business that is sold through an agent, while OneBeacon gains by being able to focus in on some core areas.”

For OneBeacon, Sheehan noted that the partnership is “mutually beneficial.” “From what I understand from our agents, they’re curious about what this will do to their markets. They seem to be enthusiastic, and I think this will give them the chance to explore some new markets.”

OneBeacon has been headquartered in Boston for nearly 30 years. The company, which sells exclusively through a network of independent agents, reported revenues for 2000 of $4.4 billion, and it ranks as the 17th largest property & casualty company in the country.

Liberty Mutual has a number of regional property and casualty companies that distribute insurance products solely through independent agents, with current total direct written premiums of nearly $2.1 billion. Those companies are: Peerless Insurance (Northeast), Indiana Insurance (Midwest), Colorado Casualty Insurance Co. (Mountain), Golden Eagle Insurance Co. (California), Montgomery Insurance Companies (Southeast), Summit Holdings Southeast and GoAmerica Auto Insurance (Specialty).

Topics USA Agencies Property Casualty Casualty

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