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Partners in personal lines Atlantic Mutual teams up with Countrywide Insurance Group to expand its reach into the affluent market By Elisabeth Boone, CPCU
Luxurious custom homes...high-end vehicles, treasured antiques...priceless fine arts...these are just a few of the exposures that characterize the market for affluent personal lines. Add in expensive personal watercraft, second homes and vacation retreats, the threat of costly liability lawsuits, and clients who expect five-star service, and it’s clear that this market poses a major challenge to the insurers that aspire to capture it. Atlantic Mutual has been meeting the needs of this demanding market ever since it introduced its Atlantic Master Plan® policy for affluent individuals in 1983. In July of this year, seeking a wider market for its product, Atlantic Mutual entered into a strategic partnership with Countrywide Insurance Group to expand the distribution of Atlantic Master Plan nationwide. A key operating unit of Countrywide Financial Corporation, the largest mortgage loan originator and servicer in the United States, Countrywide Insurance Group provides underwriting, agency, and commercial brokerage services through its member companies. Property and casualty companies of the group are rated A by Best’s. The strategic alliance between Atlantic Mutual and Countrywide Insurance Group consists mainly of a reinsurance agreement in which each company will assume a portion of the risk on affluent personal lines business. The agreement is intended to generate new revenue streams for both organizations. It will allow Atlantic Mutual’s independent agents to leverage the A rating of Countrywide’s P&C division to drive growth in the states Atlantic Mutual currently serves; in addition, work is under way to expand the partnership to the western states and Texas, where Countrywide Insurance Group will leverage the Atlantic Mutual brand to increase its access to the affluent personal lines market and will offer the Atlantic Master Plan through independent agents. Joining forces How did Atlantic Mutual, an old-line mutual insurer with deep roots in the independent agency system, come to form a partnership with Countrywide Insurance Group, which writes a large segment of its homeowners business on a direct basis? “We were looking for—and we found it with the Countrywide Insurance Group—a strategic alliance with someone who understood and appreciated what we were trying to do,” says Dan Olmsted, president of Atlantic Mutual. “We wanted someone who liked what we were doing, from the standpoint of our product, our focus on independent agents, and our commitment to service.” Atlantic Mutual also sought a partner who “shared our enthusiasm for how terrific the affluent market and the package market are,and would help us take our product around the country,” Olmsted remarks. “We’re in 14 states and Washington D.C. right now, and there are a lot of opportunities for us to expand, particularly on the West Coast.” A key goal, he noted, is to be in the California market by the second quarter of 2006. Ultimately, he says, “We want to take our product to the affluent market throughout the country. We’re looking to spread our risk and to grow our business.”
A boon for agents Olmsted continues: “Our agents have wanted us to go into more states, so when they have an individual who lives in New York or New Jersey and has one or more additional homes in other states, the agent will be able to meet those needs. As we get into more states, we’ll be able to provide full services to that customer wherever he is, so he’ll stay with Atlantic Mutual, instead of having to go to another company. Our agents are excited about that, and I think they’re excited about the opportunities they have with Countrywide.” The partnership with Countrywide also benefits Atlantic Mutual agents because it addresses a key finding in the 2005 Company Performance Survey conducted by the Professional Insurance Agents of New York, Olmsted observes. “We scored in the top five positions in 11 out of 16 categories and came in number two overall in New York,” he says. “We would have been number one overall if not for one category—having an advertised/recognizable brand. “A lot of agents have told us, ‘You’re the best kept secret in the industry,’ which is a double-edged sword,” he continues. “We want to maintain sole focus on the independent agency system, and we want to maintain a strong franchise value by being in the best agencies—the ones that match up their focus on service and their focus on providing counsel and advice to people with our focus on providing a great product and great claims service,” Olmsted declares. Atlantic Mutual currently works with approximately 300 independent agents in the states in which it now operates. “As we move into California and other states around the country, we’ll be looking for independent agents who provide the level of service and counsel we expect, and who have the kinds of clients we’re pursuing,” Olmsted says. “The Countrywide alliance offers us more opportunities to get the word out about Atlantic Mutual and to communicate it in more places around the country.” Atlantic Mutual sees the affluent market as a great opportunity for independent agents. The company cites statistics from the World Wealth Report, issued by CapGemini and Merrill Lynch, indicating that U.S. citizens with financial assets of at least $1 million grew by 14% in 2003 and 9.9% in 2004. And a Census Bureau report shows that the percentage of “million dollar homes” has nearly doubled (from 0.5% to 1%) since 2000. Atlantic Mutual estimates that about 70% of the affluent market business remains with direct writers. Many affluent customers started out with direct writers when they were young and stayed with those carriers as they moved into larger homes, bought luxury vehicles, and acquired more valuable assets. Further, Atlantic Mutual notes, the more assets people have, the more complex their insurance needs become, and the more they can benefit from the advice of an independent agent. “Affluent clients are more likely to be used to working with advisers for investment, legal, and tax issues,” Olmsted points out. “Viewing an experienced agent as a trusted adviser shouldn’t be a big leap.” Not only do affluent customers have more complex exposures and higher values at risk, Olmsted observes, but also “they don’t have a lot of time. In most cases they’re willing to pay more to get value-added services. That’s why the selection of the best agents is so important to us. We try to give our agents the tools and the direction to perform effectively in the consultant role, to help customers decide how best to protect their assets and their family. We believe this level of service can be provided only by a qualified independent agent.” Although Atlantic Mutual is not involved in the commercial insurance market, Olmsted notes that substantial cross-selling opportunities exist for agents who represent his company for personal lines and have commercial lines clients who need a product like the Atlantic Master Plan. The reverse is also true, he points out: Affluent customers who become Atlantic Master Plan insureds are often excellent prospects for commercial coverages the agent can place with other carriers. “There are a lot of opportunities for independent agents who can really shine with a high-end personal lines focus and find not only good personal lines business but also other opportunities,” Olmsted declares. Countrywide comments As noted earlier, the strategic alliance between Atlantic Mutual and Countrywide Insurance Group creates attractive opportunities for both carriers. Atlantic Mutual benefits by expanding distribution of the Atlantic Master Plan nationwide via a household name in personal financial services, while Countrywide is able to offer its affluent clients a proven product for their needs. These clients constitute a large and growing segment of the market served by Countrywide Financial Corporation, says Tom Scrivener, president of personal lines for Countrywide Insurance Group. “It’s extremely important to Countrywide to make sure we have a broad product offering to serve all customers, including the affluent home buyer.” A secondary consideration, Scrivener says, is that “it’s also extremely important to Countrywide Financial to diversify its earnings; there’s a very aggressive diversification initiative that’s widely talked about. A component of that is to continue to grow the insurance group.” Because Countrywide Insurance Group had only a limited ability to serve affluent home buyers, “our partnership with Atlantic Mutual really allows us to grow by serving a new group of people,” Scrivener asserts. “Both Dan Olmsted and I believe the affluent market is underserved, and we agree that there’s a great opportunity to bring insurance products to this group.” Scrivener agrees with Olmsted that the affluent market is best served by knowledgeable independent agents. “One of the critical benefits that Countrywide gets out of this relationship is the ability to build relationships with independent agents,” he says. “We haven’t done business with a significant number of independent agents, so the alliance with Atlantic Mutual will be our first entry into those relationships, and we’re excited about the opportunity to capitalize on Atlantic Mutual’s existing relationships with independent agents.” * For more information: |
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