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The Hartford Acquires Foremost's Commercial Insurance Lines for Small Businesses

by Precise Leads

March 8, 2018

The Hartford continues to expand with its planned acquisition of Foremost’s small commercial business lines.

The Hartford has agreed to acquire the renewal rights of Foremost Insurance Co.’s small business policies from Farmers Exchanges. The deal involves contracts sold by Foremost’s 5,000 agents and brokers across the country.

As of the end of 2017, Foremost’s book of business in the small commercial segment counted nearly $200 million in annual premiums and was mainly focused on three primary lines of insurance: business owner coverage for property, general liability, and umbrella, commercial auto, and workers’ compensation. Other details of the deal were not disclosed, though The Harford said that the acquisition would not have a material impact on its financial results.

What the Deal Means for Foremost, Farmers

For Michigan-based Foremost, the deal marks an end to its commercial business, which it assumed when it took over the Zurich Small Business line from Zurich North America in 2013. A specialty insurer, Foremost provides insurance for mobile homes, motorhomes, travel trailers, and specialty dwellings.

Its parent company, Farmers, will continue writing commercial policies through its exclusive agents as Foremost switches its emphasis to personal lines of insurance. “This move provides us the flexibility to increase our focus and invest additional resources on the small business segment, which we remain very committed to, through our vast network of Farmers agents,” Sharon Fernandez, Head of Business Insurance for Farmers Insurance, said in a statement announcing the deal.

What the Deal Means for The Hartford

Meanwhile, The Hartford will expand its foothold in the small business market and increase its distribution network, which is consistent with its recent efforts to pursue growth through acquisitions. In the fall of last year, The Hartford agreed to buy Aetna Inc.’s group life and disability insurance lines for $1.45 billion in cash, making it the country’s second largest insurer in those sectors.

The Connecticut-based company currently offers multiple lines of insurance, including group life and disability and property and casualty, as well as financial products like mutual funds. According to Zacks Equity Research, The Hartford’s commercial lines account for 47% of its revenues, which has helped the company maintain a strong stock price. Zacks reports that the company’s stock rose 11% over the past year, outperforming the industry’s overall improvement of 5.2%.

The Hartford’s financial results, however, did tumble in the fourth quarter of 2017, when it reported a net loss of $3.7 billion, a significant increase from the $81 million net loss stood it suffered in 2016. The company also reported a net loss per share of $10.37 in the fourth quarter compared to 22 cents a year earlier.

The company said that the fourth-quarter slump was partly due to a $3.1-billion loss from its discontinued life and annuity business, which it has agreed to sell to Talcott Resolution. In addition, The Hartford estimated that it would reduce its net deferred tax asset position by $850 million because of the corporate tax rate being lowered from 35% to 21% in the recently passed tax law.

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