Hartford Financial To Buy Foremost Small Commercial Lines
Zacks Investment Research | Feb 19, 2018 10:03PM ET
The Hartford Financial Services Group, Inc. (NYSE:HIG) has entered into an agreement to acquire Foremost Insurance branded small commercial lines business from Farmers Insurance Exchange, a California-based reciprocal insurer owned by its policyholders. Terms of the transaction were left undisclosed.
Hartford Financial is taking over the renewal rights on $200 million in small commercial lines premium sold through about 5,000 independent agents and brokers. The to-be-sold business contains three primary lines of businesses namely business owner’s policy for property, general liability and umbrella; commercial auto and workers’ compensation, all underwritten by Foremost Insurance Group.
Why Foremost Insurance
Grand Rapids, MI-domiciled Foremost Insurance has been a leader in specialty insurance for mobile homes, motor homes, travel trailers and specialty dwellings since 1952. The company entered the commercial lines business in 2013 with the buyout of Zurich Small Business program. The deal with Hartford Financial marks its exit from the commercial lines business. Foremost Insurance has agreed to sell its Commercial Lines business to concentrate on its Personal Lines one.
However, Farmers Insurance Exchange, the parent company of Foremost Insurance will continue to write commercial lines accounts under the Farmers brand with its exclusive agents.
Benefit to Hartford Financial
Connecticut-based Hartford Financial is one of the major multi-line insurance and investment companies in the United States, providing investment products, group life and group disability insurance, property and casualty (P&C) insurance and mutual funds in the United States.
The company’s Commercial Lines segment is a major contributor (47%) to its revenue base and has been a strong performer over the past many years.
Management believes that this buyout would further strengthen Hartford Financial’s leading position in the small business market along with providing an opportunity to expand its distribution network.
Inorganic Growth
Hartford Financial has always been taking up inorganic growth strategies to bolster its foothold in the existing markets as well as widen its base in the new markets. The company’s acquisitions also aim at improving its different lines of businesses.
In October 2017, the company inked a deal to acquire Aetna Inc’s (NYSE:AET) U.S. group life and disability business to deepen and enhance its Group Benefits distribution capabilities and accelerate its technology strategy.
Share Price Performance
The company’s growth strategies have helped retain its shareholders’ confidence in the stock. In a year’s time, the shares have gained about 11%, outperforming the Original post
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