Best of both worlds: although many insurers are divesting lines of business to focus on core products, a few multiline insurers are sticking to their course and coming out ahead. (Cover Story).In the 1980s and early 1990s, multiline A cable, channel or bus that contains two or more transmission paths (wires or optical fibers). insurers were prevalent throughout the industry. The large companies sought to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. of products and economies of scale. But a funny thing happened on the way to continued success. "The beginning of the end for multiline insurers came in the late 1980s with the advent of equity-linked products," said Michael G. Paisan, an equity analyst with Legg Mason Founded in 1899, Legg Mason, Inc. (NYSE: LM) is a leading Global Asset Management Firm that serves the institutional, mutual fund and wealth management markets. The firm is headquartered in Baltimore, Maryland, and is located on Lombard and Charles Streets in the Legg Mason Wood Walker. Combining property/casualty and life industries worked better when the life products were mainly life insurance; the new model meant insurers had to become hybrid asset management companies, he said. Under those circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , the two industries didn't mix as well. The result was that many companies began to sell noncore operations and narrow their focus to the lines of business with which they had the most expertise. A few, however, determined to stay with their multiline approach. Three of those companies stayed the course so well that they achieved top 10 status for 2002 in both the property/casualty industry and the life industry American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. ranked third in property/casualty and second in life; Hartford ranked 10th in property/casualty and sixth in life, and Nationwide ranked seventh in property/casualty and 10th in life. The profiles on the following pages reveal some of the strategies and strengths that have kept these companies in the lead. "It's very difficult to manage both sides," Paisan said. "The products are manufactured differently; the exposures and liabilities are different; the distribution is different." The best way to approach multiline management is the model Hartford uses, he said. "They're still standing because they managed each side of the business separately. They didn't try to commingle commingle to mingle together, e.g. cattle mingling with deer. ." As time goes by, multiine insurers may find themselves a smaller group. "In the near future, companies will continue to become more narrowly focused," Paisan said. "Then the most narrowly focused will be acquired by others, but you probably won't see any cross-buying. Companies will stay faithful to property/casualty or life." |
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