Heritage targets diversifying growth with AIG Private Client deal

Heritage Insurance Holdings, Inc., the Florida headquartered and nationally expanding U.S. property casualty insurer, has struck a deal with insurance giant AIG that will see Heritage taking on some of its Private Client Group policy renewals.

The arrangement is due to American International Group’s (AIG) new focus on the high net worth segment of its Private Client Group business, which will see it shed policies in the upper middle market personal insurance business segment.

Heritage is one of the insurers to benefit from this, alongside Liberty Mutual owned Safeco.

Heritage will offer policy renewals to selected AIG Private Client Group personal lines policyholders, in the upper middle market homeowners segment.

The insurer sees this as an opportunity to further enhance its ability to realise reinsurance synergies, as more than 90% of the AIG PCG policies it will be offering renewals for are located outside of its home state of Florida.

Heritage has been expanding outside of Florida steadily in recent years, with its mission to gain exposure far more broadly across the United States already seen to be helping the company at reinsurance renewal time.

The added diversification to its homeowners portfolio, means that it gains synergies in terms of diversification across its reinsurance tower, ultimately helping to lower the cost of its overall program per unit of coverage achieved.

Heritage will be offering policy renewals to AIG PCG clients in sixteen of the seventeen states it holds insurance licenses for, with the majority in the northeast of the country.

The renewals will be effective in the fourth-quarter of the year, which means we could see Heritage looking to access the reinsurance market to support that portfolio growth around the end of 2020.

Heritage is also set to offer appointments to some of the AIG distribution partners with impacted policies, which will grow the insurers current distribution force and help it to expand further in future.

Bruce Lucas, Heritage’s Chairman and CEO, commented, “We’re excited to partner with Safeco on this opportunity and look forward to developing relationships with new agents and providing a seamless transition for policyholders. Most of the premium is located outside Florida, furthering our multi-state growth initiatives and providing reinsurance synergies.

“Heritage is known in the industry for our coastal property expertise, offering competitive products, providing excellent policyholder service, and settling claims quickly and fairly. We look forward to partnering with AIG agents, who can expect a seamless transition and strong opportunities for continued growth in the upper middle market customer segment.”

“Building on the recent launch of Lloyd’s Syndicate 2019 and the refinement of PCG’s risk appetite, this agreement optimizes our portfolio and allows us to focus on our relationships with our high net worth clients and distribution partners, thereby strengthening our core value proposition,” Kathleen Zortman, President & Chief Executive Officer of Private Client Group, AIG General Insurance added. “We look forward to working with Safeco and Heritage to provide AIG PCG’s upper middle market agents and their customers with a seamless transition.”

As Heritage further expands its business with this arrangement, it increases the chances of the company leveraging the capital markets and ILS funds for a growing reinsurance tower in years to come.

While it will generate synergies, this further growth of its portfolio will likely drive the need for more reinsurance further down the line.