Allianz Sells Private Bank OLB to Private Equity Firm Apollo for $336M

German insurer Allianz said it had agreed to sell its 90 percent stake in private bank Oldenburgische Landesbank (OLB) to U.S. private equity firm Apollo for 300 million euros ($336 million).

Apollo, which is consolidating the northern German banking market and has also signaled interest in HSH Nordbank, said it would attach OLB to its Bremer Kreditbank, which it bought in 2014.

Allianz, which announced the sale agreement on Friday, had said last September it was exploring options for OLB, Germany’s largest regional private bank by assets. It acquired OLB as part of Dresdner Bank in 2001 and had said was no longer of strategic importance.

New EU capital rules at the start of last year [Solvency II have been prompting insurers such as Allianz to review whether the profit they gain from stake holdings is worth the regulatory capital they are required to hold.

Apollo will make an offer to the other 10 percent of OLB shareholders. The price it is paying Allianz represents 14.30 euros per share, compared with OLB’s closing price on Friday of 18.30 euros per share.

Allianz said it would continue to cooperate with OLB to distribute insurance.

($1 = 0.8937 euros) (Reporting by Georgina Prodhan and Alexander Huebner; editing by Tom Brown)

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Posted in Insurance News

Everest Re Taps Hiscox’s Kelly to Lead International Casualty Facultative Unit

Everest Re Group, Ltd. announced that Matthew Kelly has joined the group as vice president and head of the Reinsurance Division’s International Casualty Facultative unit and is based in Everest Re’s Miami Office. He will be responsible for worldwide casualty facultative underwriting, excluding business written for U.S. and Canada clients.

Kelly joins Everest with more than 20 years of industry experience, most recently as regional head of casualty and specialty casualty with Hiscox. Kelly had previously headed up the casualty and specialty casualty underwriting practice for prominent carriers in Latin America and Caribbean. His experience includes insurance operations overseas in Mexico, Puerto Rico, and Argentina.

Source: Everest Re Group, Ltd.

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Whirlpool Fridge Started London’s Grenfell Tower Fire that Killed at Least 79

A deadly fire that killed at least 79 people in a London tower block started in a Whirlpool Corp. fridge and spread at “unexpected speed” through the building’s exterior cladding, police said, indicating they’ll pursue charges if criminal offenses are identified.

“We are looking at every criminal offense from manslaughter onwards,” Detective Superintendent Fiona McCormack said on Friday in a press briefing. That includes “health and safety and fire safety offenses, and we are looking at every company involved in the refurbishment of the building,” she said.

The fire gutted Grenfell Tower, a block of mainly social housing in the U.K. capital’s most affluent district of Kensington, in the west of the city. It’s led to anger and street protests at the local and national government’s response to the disaster and questions over whether spending cuts compromised safety.

Police identified the fridge model as a Hotpoint FF175BP, and the Department for Business issued a statement saying the device is being examined by technical experts to “establish whether any further action is required,” such as a product recall. “At this stage there is no specific reason for consumers to switch off their fridge freezer pending further investigation,” the department said.

Building Checks

Whirlpool shares fell the most intraday [on Friday, June 23] since May 18, and were down more than 3 percent at 11:30 a.m. in New York trading. The company said in a statement that 64,000 of the fridges were manufactured by Indesit between 2006 and 2009, when the model was discontinued, several years before Whirlpool acquired the company.

“We are working with the authorities to obtain access to the appliance so that we can assist with the ongoing investigations,” the company said in a statement. “We are addressing this as a matter of utmost urgency and assisting the authorities in any way we can.”

Inspections are being carried out on about 600 social housing tower blocks in England and 11 have so far failed initial safety tests. Checks are also being offered to owners of privately held tower blocks as well as schools, hospitals and other public buildings, Prime Minister Theresa May’s spokeswoman, Alison Donnelly, told reporters on Friday.

Police are seizing “relevant material from a number of organizations,” McCormack told reporters, without naming the companies or authorities involved. Media attention has focused on a unit of Rydon Group, which refurbished the building last summer. The company issued a statement last week saying its work “met all required building regulations — as well as fire regulation and health and safety standards.”


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Posted in Insurance News

Planned Sale of Israel’s Phoenix Holdings to China’s Yango Is Scrapped

Israeli energy conglomerate Delek said its planned sale of a controlling stake in Israeli insurer Phoenix Holdings to China’s Fujian Yango Group has been called off by both sides after it failed to secure regulatory approval.

It did not give a reason for the failure. However, the Israeli government has expressed concerns over the purchase of key financial assets such as insurers by Chinese investors, fretting over pension cash.

Delek, which holds significant stakes in Israel’s largest natural gas fields and other energy assets, is required to sell some of its financial assets under a new Israeli regulation that prohibits large domestic conglomerates from holding both financial and non-financial businesses.

Delek signed a binding agreement last August to sell its 52.3 percent stake in Phoenix to Yango for 1.97 billion shekels ($557 million). That price was raised to 2.15 billion shekels in April.

“Due to the prolonged process of obtaining the approval for the sale of control in Phoenix to Yango Group, the two sides agreed today, June 26, to cancel the agreement,” Delek said in a statement.

“The company has been approached by other entities in Israel and abroad regarding the sale of its holdings in Phoenix and will continue to act to sell its holdings as required by law.”

In March last year a non-binding agreement by Delek to sell Phoenix to a U.S. insurer, which industry sources identified as AmTrust Financial Services, was canceled by both sides.

Delek had previously agreed to sell its Phoenix stake to China’s Fosun International for 1.8 billion shekels but the deal collapsed when conditions were not met.

The IDB Development group, another Israeli conglomerate, has also faced regulatory difficulties in its attempts to sell control of Clal Insurance to Chinese investors.

($1 = 3.5351 shekels) (Reporting by Tova Cohen; editing by Susan Fenton)

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As Agents’ Needs Change and Startups Emerge, Big ‘I’ Looks to Remain Relevant

Spencer Houldin is chairman of the nation’s largest and oldest agents’ association, the Independent Insurance Agents and Brokers of America (Big “I”). He is also co-president of the family-run Ericson Insurance Advisors, an 80-year old agency serving the greater New York City and Litchfield County, Connecticut region. His father William Houldin, who took over the agency in 1963 after the death of its founder, retired in 2005, leaving the agency in the hands of his sons, Peter, Scott and Spencer. Spencer has 25 years of experience as a personal insurance advisor and leads Ericson’s high net worth personal insurance division. 

As chairman of the Big “I”, Houldin has come to appreciate how many agencies are small startups that are looking for different help from the association than firms like his established business might expect. In this edited interview with Insurance Journal’s Andrea Wells, he discusses the meaning of independence in an age of private equity, how his own agency developed its high-net-worth specialty, the future for different distribution channels, and the role of the association in meeting the needs of today’s agencies.

Wells:  Let’s talk about independent because just in my short time in the industry, it does seem that independent, the term, has changed. There are agencies now that are owned by carriers and by banks. They’re owned by private equity investors. What does being independent mean to you?

Houldin:  To me, independent means that we have choice and that we can deliver to the consumer a customized solution at a very competitive price. When you look at the three different channels of selling insurance, you have your direct writers, your 800 numbers. There is a consumer that’s interested in that but there really isn’t any counsel. There really isn’t any consumer advice that’s given to those people.

Then you have your captive agents, who only sell one product and that’s for that insurance company. While they provide the counsel, they don’t have any choice in anything but what they have.

The real power, especially as technology is allowing an independent agent to give higher level of service on off-hours, is the independent agent that not only can give the 24‑7 service but also can have many, many solutions in their arsenal. I think this will be the direction of the future for the consumer. I really do.

I’m really scared about the captive agent, that they’re going to be squeezed out, and we’re going to have direct writers and we’re going to have independent agents.

But it’s a really exciting time to be an independent agent.

Wells:  What are your goals for your chairmanship?

Houldin:  I think it’s really important that we focus on the value proposition to our end user today and for tomorrow. Of course, we have mergers and acquisitions that are taking place at a rapid pace but we also have a lot of startups.

Our Agency Universe Study that came out late last year showed that the number of independent agencies in the country actually has stayed fairly flat over the last decade. Despite the myth that mergers and acquisitions are making the independent agent system decrease in numbers, it’s actually not true, because we have a lot of people that are starting up in small offices. We need to capture them as members.

We have started a very significant initiative on membership recruitment. We started with two states, South Carolina and New Jersey, at the beginning of this year. They’re our beta testers. New Jersey has already acquired eight new members, and they all tend to be the startup types.

I think it’s important that we address the needs of all of our members but especially the startup types. The world is changing at a faster pace than we’ve ever seen. Why somebody belongs to a trade association 20 years ago is different than why they belong today, so trying to identify what does the member need from us so that we can stay relevant.

We’re in the process now, as an executive committee and as a board, looking at the future needs of the independent agency system so that we can meet those needs and stay relevant.

Wells:  Obviously, a younger agency or a smaller agency might have different needs or goals or wishes. How do you address those?

Houldin:  We do have markets. We have Big “I” Markets, which is a Big “I” initiative, where we have contracted with insurance companies that a smaller agency may not have the volume to be able to get an appointment on their own. But they can access many markets through Big “I” Markets. Using the power of 22,000 independent agencies that are members, we’re able to bring market access to those younger and startup agencies.

Also,  our resources, whether education, or  errors and omissions products. We have a bank designed specifically to loan money to startups. It’s called InsurBanc. We have a ton of tools for that startup agency to help them get off the ground.

Wells:   I know your agency’s history, I believe 80‑something years, right? Over that time,you have evolved into a specialist agency. How much of your business today is in the high net worth market?

Houldin:  It’s interesting. About 10 years ago, we sold our benefits division, so we only sell property and casualty. At that time, we were about 60 percent personal lines from a revenue standpoint, 40 percent commercial ‑‑ again, all property and casualty. Today, we’re about 80 percent personal insurance, 20 percent commercial insurance.

We decided that there is a segment of the population that wants a different client experience. While price is always going to be important, there is a customer intimacy, there is a customer experience that can be a very powerful value proposition.

We decided to go after that consumer that really wants amazing not only advice but, for instance, when they have a car accident, we’ll have a rental car delivered to their house. Just like somebody’s willing to spend a thousand dollars a night on a hotel room for a different experience, that’s the consumer that we decided to go after.

Revenue-wise, it’s just gone through the roof. On finding those, that’s been a difficult thing over a decade, how you get to the high net worth individual. The good news is that rich people talk to rich people. Although it takes a while, word of mouth is how it has spread.

Wells:  How would you describe the market for high net worth? I know there’s a limited amount of business and rates have been dropping in the soft market, yet you have seen some new entrants in the high net worth market. Is the competition steep?

Houldin:  It’s always steep but we love competition because it only makes us stronger. Certainly with the consolidation of ACE, Chubb and Fireman’s Fund into the new Chubb, we’ve lost some markets in the high net worth space but as you mentioned, there are some entrants.

I think what’s more of an opportunity for us is there is a ton of business that is with direct writers that technically is high net worth or affluent business. We have a saying, “get rich, never switch.” People will go and buy a what I will call vanilla contract, when they’re in their 20s, and they’ll just never change because they either are intimidated by the product to begin with or they just don’t know any better.

I think that the opportunity is actually getting to the individuals that haven’t seen or been taught, “Why would I go with a company like Chubb or AIG Private Client Group or PURE or Cincinnati? Why is their contract better? Why is their claims service better? Why do they fit our needs better?”

Wells:   Technology is changing very rapidly. Your own agency has developed something new. Talk about InsureScope.

Houldin:  InsureScope is an effort to bring the digital world to the independent agency system and the high net worth. We feel strongly that there is a segment of the population, especially the emerging wealth, who do want to do business online but they also want the advice. InsureScope is a way for somebody to engage with us in a digital fashion. We will communicate to them with a highly customized solution but it won’t be voice‑to‑voice as much as it will be digital‑to‑digital, and it will be a 24‑7 solution.

We’re experimenting with it. We’re learning a lot. We’re really excited about the launch that occurred about six weeks ago. We’ve gotten great response and we’ll continue to learn and evolve the product over the coming years.

Wells: What about the area of talent, hiring younger people. Is that something that your agency has invested in?

Houldin:  It definitely is a crisis in the independent agency system to bring on the next generation. There are plenty of resources to help train them and the Big “I” certainly has developed many resources.

I think what’s difficult is, depending on where you are, that how you source some of it changes. If you’re in a college town, for instance, that’s a much different strategy than if you’re where Ericson Insurance is, which is in a town of 2,500 people in the hills of Connecticut.

Our last two hires have been young adults who are phenomenal individuals in many ways but do not have any insurance experience. For the last two years, we’ve been teaching them insurance and they’ve both turned into superstars.

There’s different ways to acquire talent and to source talent, but it really can be geographic in nature. I think what’s a shame is our industry is an incredibly great industry but it’s not sexy. Young people have no idea what an independent agent does and, quite frankly, I don’t think we do a good job of telling our story.

Anybody that’s in the business looks back and says, “Best decision of my life was to become an independent agent,” for reasons that I’ve stated before. It just gives you independence of your schedule, it’s a very financially rewarding industry, and it gives you an opportunity to help people. I think it’s overlooked by young people and I think that’s a huge mistake.

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Posted in Insurance News