Posted on 15 Jan 2009
Allianz SE, Europe’s largest insurer, is spending $100 million to compete with Allstate Corp. and Warren Buffett’s Geico Corp. and become a “major player” in the U.S. car and home insurance markets.
The investment in Allianz’s Novato, California-based Fireman’s Fund unit will allow the firm to expand from covering the homes, artwork, wine cellars and collectible cars of wealthy customers to a wider clientele, Fireman’s Fund Chief Executive Officer Michael LaRocco said in an interview yesterday.
Fireman’s Fund, which sells policies through independent insurance agents, plans to add brokers in states where it has a limited presence and upgrade its technology to evaluate the risks for homeowners and drivers it hasn’t covered, LaRocco said. Fireman’s Fund also will expand its coverage of small businesses, he said.
“When you are owned by Allianz -- when you have the financial strength of Allianz -- we should be a major player in the United States property and casualty market,” LaRocco said. “That’s what this plan is about: taking us from a small, important niche player to a major player in the United States market.”
Fireman’s Fund will begin offering coverage to a broader base of customers in the third quarter and complete a “significant” portion of the rollout by the end of 2010, he said. Allianz, based in Munich, also sells insurance for hotels, film productions and yachts in the U.S. through Fireman’s Fund.
Mapfre, Tokio Marine
Allianz joins non-U.S. insurers including Japan’s Tokio Marine Holdings Inc. and Spain’s Mapfre SA in seeking to gain U.S. market share.
Tokio Marine agreed in July to buy Philadelphia Consolidated Holding Corp. for $4.7 billion and Mapfre SA, Spain’s biggest insurer, bought Commerce Group Inc. in Webster, Massachusetts, last year for about $2.2 billion. In 2007, Switzerland’s Zurich Financial Services AG bought Davie, Florida-based Bristol West Holdings Inc. for about $700 million.
Competitor American International Group Inc., seeking cash to repay a U.S. loan, is divesting units including an auto insurer that sells coverage over the Internet. AIG’s car insurer holds little interest for Fireman’s Fund, LaRocco said.
“We believe the best way to grow is by taking business away from our competitors,” LaRocco said. “I’m not particularly interested in paying for someone’s business when I can take it away efficiently by being a strong competitor.”
State Farm Mutual Automobile Insurance Co., owned by its policyholders, is the largest U.S. auto insurer, followed by Allstate. Geico, owned by Buffett’s Berkshire Hathaway Inc., is competing with Progressive Corp. for the third ranking.