Home Insurance Quotes
Homesite Insurance buys Royal Special Risks to gobble up licenses
Homesite Insurance Co. has purchased Royal Special Risks Insurance Co., more than doubling the number of states in which it can sell insurance. As a result, Homesite CEO Charlie Kline says sales are expected to increase from approximately $500,000 in 2000 to about $50 million in 2001.
Homesite paid $14.9 million in cash to complete the purchase, according to Connecticut regulators who approved the deal.
"Our prospects of selling over the Internet . . . are greatly enhanced."
Homesite, based in Boston, is currently one of two insurers binding condominium owners, homeowners, and renters insurance over the Internet — meaning you can receive coverage three days after you submit your application on the Web. Allstate Insurance Co. is the other.
Royal Special Risks, based in Charlotte, N.C., is a subsidiary of Royal & SunAlliance Group, and primarily sells liability insurance. However, Homesite did not purchase Royal Special Risks for its current business base. Homesite bought the company because of the number of states in which Royal Special Risks is licensed to sell insurance.
The acquisition of Royal Special Risks will expand the number of states in which Homesite sells insurance from 20 to 48 (excluding Arkansas and Alabama). "Our prospects of selling over the Internet, whether through our own site, homesite.com, or through Internet partners, are greatly enhanced if we are writing in most states," says Kline.
Web sales to take a back seat
Homesite has sold approximately $500,000 worth of homeowners insurance in 2000, primarily over the Internet. But Kline says at this time next year, most of his company's sales will be through its financial institution partners, such as General Motors Acceptance Corp. (GMAC), InsWeb, Homestore.com, Realtor.com, and Moving.com.
Kline expects Homesite's premiums written to jump upwards of $50 million because it will assume approximately $30 million worth of business from one of its financial institution partners. Kline would not disclose which partner's business Homesite would assume.
In 2001, Kline expects Web-based transactions to account for approximately 20 percent of the insurer's sales. The other 80 percent will come from sales through the company's financial partners. However, Kline expects the margin to narrow further down the road, with Web-based sales accounting for around 30 percent of all the company's insurance sales.