In sync with the long term strategy to grow its non standard line of business, Everest Re Group, Ltd.
(RE - Analyst Report
) has entered into an agreement with Arrowhead General Insurance Agency, Inc. (Arrowhead), a subsidiary of Brown & Brown, Inc.
(BRO - Analyst Report
The agreement involves Everest Re’s subsidiary Everest Security Insurance Company, (“ESIC”). Per the agreement ESIC will transfer to Arrowhead specific assets associated with its non-standard automobile business.
Non-standard auto insurance provides coverage to drivers who, due to their driving record, age, vehicle type, or some other factor, represent higher than normal risks and do not qualify for coverage in standard markets. As required, these perceived higher risk drivers pay substantially higher premiums than standard drivers.
With effect from Apr 1, 2013, all the employees of ESIC will change their position to begin to serve Arrowhead. The combined book of non-standard automobile business will be managed solely by Everest, who will be its exclusive underwriter.
Everest’s non-standard automobile businesses will more than double from $30 million at present to approximately $80 million after the agreement.
The agreement will provide synergy for both parties involved. The superior financial strength of Everest Re is expected to perfectly complement Arrowhead’s deep experience in the non standard automobile insurance line of business.
Everest Re has had a long standing relationship with Arrowhead. The former writes several programs for the latter.
Everest Re is attracted towards the non-standard line of business since it has been growing steadily, over the past many years. The growth in this line of business is because larger standard auto insurers are tightening their underwriting standards, driving more insureds into the non-standard ranks. Moreover, improved implementation by the states of mandatory insurance laws is driving demand for such insurance. Therefore, the nonstandard market is expected to grow faster than personal auto business.
Other companies that provide non-standard automobile insurance coverage are PartnerRe Ltd.
, and Progressive Corp.
(PGR - Analyst Report
) , among others.
Everest Re currently retains a Zacks Rank #2 (Buy).