Archive for Insurance
In a much expected move, the Wall Street Journal reported that Citgroup Inc. (C) released plans to spin off its Primerica Inc. Life-insurance and mutual fund sales unit. The move, which will undoubtedly be cheered by regulators, signals a further dismantling of the once sprawling company.
The move was not unexpected. Earlier this year, Citigroup created Citi Holdings as a separate entity for Primerica and other unwanted assets and businesses. At that time, Citigroup found it difficult to find buyers among financial institutions and private equity investors.
Michael Corbat, the CEO of Citi Holdings, said Primerica’s planned IPO “represents an important step in simplifying our organization and demonstrates our continued success in finding solutions for Citi Holdings.”
The move will further strengthen Citigroup’s capital buffers and also signal to anxious regulators and investors that Chief Executive Vikram Pandit is making progress at whittling down the sprawling company. Citigroup said it will continue to collect some earnings from Primerica going forward.
The details of the proposed sale highlights the work that remains in the restructuring of what has become a complex financial services company. With $12.1 billion in assets as of June 30, Primerica represents less than 2% of the $617 billion in Citi Holdings assets as of September 30.
That being said, the spinoff, despite its modest size, holds important symbolic significance. Primerica was a cornerstone of the “new” financial services model pioneered, in part, by former Citigroup chairman and CEO Sanford Weill.
Following on the heels of the Smith Barney retail brokerage sale earlier this year, the sale of Primerica would close the chapter on what looked like a business model that never took shape.
In 1998, Mr. Weill merged Primerica among other entitites with Citicorp to spawn today’s Citigroup. But Primerica was never integrated into the rest of Citigroup and became a textbook example of the difficulties that can arise when merging corporate cultures.
Primerica’s pursuit of lower-end customers didn’t mesh with Mr. Pandit’s vision for a slimmed-down Citigroup that caters to giant institutions and affluent individuals. Furthermore, Primerica’s army of insurance and mutual-fund salespeople maintained a fierce independence from Citigroup. And, as the parent company’s financial problems mounted, some Primerica employees clamored to sever their ties with Citigroup.
Headquartered in Duluth, Ga., but with roughly 100,000 sales representatives scattered across the U.S., Primerica sold insurance, mutual funds and other financial products to lower-end customers.
GEICO (NYSE: NYSE:BRK.A), Progressive (NYSE: PGR) and Allstate (NYSE: ALL) have all recently run advertising campaigns telling consumers that their automobile insurance products could save consumers over the competition—and they’re all right.
Each of these companies can correctly state that they could save consumers hundreds of dollars per year versus the competition because there are huge differences as to what any given consumer will pay at any of the major insurers. For some consumers, GEICO might be the cheapest. For others, Allstate or Progressive, State Farm or anyone else could be the cheapest.
There are substantial differences between what insurance will charge a consumer based on that individual driver’s circumstances. Each insurance company uses its own criteria to assess your potential risk level and price your insurance policy accordingly. Each company can correctly state that they’re the cheapest because they’re all assessing different motorists profiles and presenting the results as typical.
Consumer reports recently put Progressive’s claims to be the cheapest and found that it was the cheapest in some cases and almost twice as expensive as what other companies might charge a motorist.
The moral of the story is diligence—you need to be diligent when shopping for car insurance over the phone and on the web for the best deals. Make sure to get a coverage statement from each insurer that you’re dealing with and compare the different coverage’s you’ll receive on an apples-to-apples basis with other insurers’ offerings.
Typically, consumer advocates recommend that customers re-shop their insurance policies ever 3 years to ensure that they are getting the best deal. If you’ve recently been in an accident and it was your fault or get a reported ticket, it’s recommended that you wait until 3 years after that event has occurred before re-shopping your policy.
7 Ways to Reduce The Cost of Your Homeowner’s Insurance
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Home owner’s insurance premiums are costly, but there are a number of ways you can reduce the amount you pay to cover your home against the unthinkable. Here are 7 ways to reduce your home insurance premium:
1. Install an alarm system. Most insurance companies will provide you with a discount if you have an alarm system installed in your home. Discounts range between 5% and 30%.
2. Combine all of your insurance policies. Look for an insurance company that offers multiple lines of insurance policies and then insure everything with one provider. For example, your home owner’s insurance, automobile insurance, and life insurance can all be with the same company which will likely result in a “multiple line discount”, typically 10% off your total insurance premium. Look for a mortgage list brokers which can help you get a list of providers in your area, specifically ask for their direct mail mailing lists which will contain all of the latests ads and offers.
3. Disaster Protection and upgrades. In areas that are prone to natural disasters (earthquakes, hurricanes, etc) you can often install features like reinforced roofing or storm gutters and gain a discount. Sometimes upgrading your heating and electrical systems will give you an insurance premium discount as well, so check with your company to find out if any of these home upgrades will result in a discount.
4. Stop smoking. Not only is smoking bad for your health, but it’s one of the leading causes of home fires. Smokers pay less for home owners insurance than non-smokers. Quit smoking and call the insurance company to update the record for a lower insurance premium.
5. Raise the deductible. Just like automobile insurance, homeowner’s insurance premiums have deductibles. This is the amount of money you pay if you submit a claim; the insurance company pays for damages above and beyond the deductible amount. If you can afford to raise your deductible from $500 to $1000, for example, you can experience savings of around 25%.
6. Raise your credit score. It seems more companies are relying on a credit score to determine how much people should pay for certain policies- and home insurance often relies on your credit score as a determining factor in how much you’ll pay for home owner’s insurance. Agree with it or not, the best thing you can do is raise your credit score.
7. Forget about the land. Most disasters will cause damage to your home, and very little to the land. Decide to cover your home only and you’ll save considerably on your home insurance premiums. Many marketers that collect new homeowner lists will specifically market home-only insurance. If your land is in a hot area, you don’t need to insure it.