Allianz to sell Fireman’s Fund personal insurance business to ACE

Allianz Group plans to sell the Fireman’s Fund Insurance Company’s (FFIC) personal lines insurance business in the United States, which is focused on high net worth customers, to ACE Limited for US$365 million by means of renewal rights arrangement.

An Allianz SE statement issued Thursday notes that Allianz SE and ACE Limited announced the definitive agreement, which is subject to legal and regulatory approval. The sale – which is expected to be completed in the second quarter of 2015 – includes the renewal rights, reinsurance of existing liabilities, and access to an extensive network of 1,100 agents and brokers.

FFIC’s personal insurance business will be integrated into ACE’s existing high net worth personal lines business. In 2013, FFIC had US$891 million in personal insurance gross premiums written.

The move follows Allianz’s decision earlier this year to reposition its property and casualty insurance business in the U.S. by integrating FFIC’s commercial business into Allianz Global Corporate & Specialty (AGCS), the global industrial insurer of Allianz Group. The integration of FFIC’s Fund commercial lines into AGCS creates a focus on commercial p&c insurance under the Allianz brand, creating a business with combined revenues expected to total over US$3 billion.

The new run-off carrier, San Francisco Re, will manage legacy FFIC business. Subject to legal and regulatory approval, “it is the intention to ultimately separate and consolidate the legacy business of FFIC, including legacy asbestos and environment exposures, legacy workers’ compensation, and legacy construction defect liabilities,” into San Francisco Re, adds the statement.

The FFIC commercial business will be integrated into AGCS North America, with all active product lines moving to AGCS, ensuring continuity of service for existing commercial policyholders and agents. AGCS will also seek to build on the FFIC product range globally, targeting opportunities to use FFIC’s specialist knowledge of entertainment and mid-corporate insurance in international markets.

“These latest moves will complete the picture of the reconfiguration of our property & casualty insurance business in the United States with a strong footprint in commercial insurance,” Axel Theis, incoming member of Allianz SE’s Board of Management, says in the statement. “The sale of the Fireman’s Fund personal insurance business will give it a larger scale and ensure its continuity for brokers and policyholders,” Theis continues.

Capital efficiencies will be gained by releasing capital allocated to the personal insurance risks, allowing for the proceeds to be used “to finance the restructuring of the Fireman’s Fund commercial P&C business. Taken with the creation of the new run-off carrier San Francisco Re, these measures enable Allianz to focus its energies even more strongly on successfully integrating the Fireman’s Fund commercial business into AGCS,” Theis adds.

Announced earlier this month, the new leadership team for the combined FFIC/AGCS business will see AGCS board member Art Moossmann become CEO and President of both AGCS North America and FFIC, effective Jan. 1, 2015.