This morning, ACE announced it has signed a definitive agreement to acquire the Fireman’s Fund high net-worth personal lines insurance business in the United States from Allianz for $365 million. The combined business will have approximately $1.5 billion in premiums, analysts estimate.
Independent Agent spoke with Bob Courtemanche, chairman, ACE Private Risk Services, and Mary Boyd, division president, ACE Private Risk Services, about what the announcement means for the affluent market—and how the transaction will play out for agents.
IA: Why does this acquisition make sense for ACE?
Courtemanche: From a strategic point of view, this acquisition is just a reinforcement of ACE’s commitment to the high-net worth business, both in the U.S. and globally. This adds a lot of scale to our business.In 2013, Fireman’s Fund had $891 million in personal lines gross written premiums and ranked third among insurers serving the U.S. high net-worth consumer market. The ACE brand will be the brand for the business going forward, and it will be on our paper.
What strengths does Fireman’s Fund bring to the table and how do those strengths complement ACE?
Boyd: They have an experienced and well-respected high net-worth team. Many are former colleagues of ours and we’re looking forward to joining together as a combined team. Fireman’s Fund has a strong reputation for agency partnership and client-focused solutions. That has been a foundation of their brand and value proposition and that directly aligns with our vision as a leading high net-worth insurance carrier. We believe our combined teams will only improve and sharpen that focus.
Another area is claims. Claims service and execution is critical to any insurance company, but in particular a high-net worth insurance company. Fireman’s Fund has developed claims capabilities that are exceptionally focused on quick resolution and responsive service. We do plan to adopt and build upon their claims service and settlement model.
How does this acquisition change your agency footprint?
Courtemanche: We think probably 80% of the agents already represent both companies, but there will be 20% that don’t, so there will be an expanded presence of ACE in the market.
Boyd: It does accelerate our presence and the relevancy of ACE within our existing agency partners and we look forward to the addition of the Fireman’s Fund agency partners that we’re not yet working with today. This will bring us into a top leading position in this market in the next year.
In terms of how we will handle the agents who are not with us today, we will ultimately appoint them so we can continue to partner with them, share our underwriting appetite and help them get access to our systems.
Some agents have noted that currently there is an underwriting philosophical difference between the two companies. What would you tell agents who are concerned about that?
Boyd: We have a renewal rights deal---if part of their concern is that we would not offer a renewal on their Fireman’s Fund-placed client today, they don’t need to worry about that, because we will offer a renewal. To the extent that those clients don’t match our current underwriting guidelines----we don’t expect to make major changes in our underwriting appetite specifically related to this deal. Until we close the transaction, we won’t have access to specific client information to be able to identify issues.
One of the things we learned during our due diligence is that many of the Fireman’s Fund clients are written more monoline than ACE accounts, but sometimes that might be because from a technology perspective the Fireman’s Fund agents didn’t have the ability to easily add an auto to an account. We have that opportunity at ACE. There is still much to learn and evaluate, but we’re optimistic about how we can bring the books together.
How will the transaction play out for agents from an ease of doing business perspective?
Courtemanche: We want to make this transition as easy as possible with the Fireman’s Fund books of business. It will as much as possible be an electronic process so they won’t have to do additional front lines work at the agencies. We have a whole different world of transactional ability. We have expanded bill paying options—a client can go online and pay their bill. In the policy issuance world, we have the ability to put multiple homes on one policy and package that, where the Fireman’s Fund systems don’t allow that currently. The clients also have access to a policyholder center where they can look at their policy declarations and bills online—again, you eliminate some transactional need so that the agent can be the more consultative role and not a reactive and transactional role.
We believe need for high net-worth expertise both at the agent level and the companies that are committed to the long-term in this business. The opportunity is great. We’re excited about the combination of these two companies.
Katie Butler is IA editor in chief.