Business Moves

The Hanover

Specialty lines business will be a key growth engine in the next several years for Worcester, Mass.-based The Hanover, according to CEO Fred Eppinger.

In the past year, revenue from specialty lines at The Hanover has grown from roughly $65 million to $500 million, fueled by a spending spree that includes the purchase or expansion of specialty products, services and companies — including last year’s acquisition of Windsor, Conn.-based specialty insurer AIX Holdings.

Eppinger’s plans for The Hanover coincided with A.M. Best upgrading the company’s insurer financial strength rating, to “A,” the third ratings firm in 15 months to do so. Considering the state of the industry as a whole, an upgrade in the current market is rare. But viewed in the context of The Hanover’s recent history, it’s nothing short of amazing.

In 2003, the company sat on the verge of ruin, and Eppinger led a turnaround effort ditching The Hanover’s life insurance business to focus on property/casualty business. Eppinger and other executives began focusing more acutely on underwriting, rather than investment gains, as the key driver of The Hanover.

“I made it very clear that we’re in the underwriting business,” Eppinger said. “Our portfolio is very conservative around investment grade bonds. Our skill is in underwriting, and not” playing the market.

That conservative, investment-wary approach partially laid the roots five years ago for the financial stability the company is now seeing, Eppinger said. The upgrade, he added, “is a very important mark in the journey we have made … this allows us to be one the most important companies for independent agents over the next two years.”

The company’s capital base is $1 billion stronger than in 2003 with $400 million at the holding company level, that Eppinger plans to leverage by investing in new products and services, and bringing in talent from distressed, larger competitors.

Over the short term, Eppinger said The Hanover will focus on improving product offerings in specialty lines and providing greater access for agents to those markets. Eppinger also said the company will grow in niche middle-market lines for institutions, schools and nonprofits, which have also been significant revenue drivers for the insurer.

That also means growing The Hanover’s presence across the country. The company writes currently in 35 states, but lacks a physical presence in 30.

“With the disruption in the industry, we have had agents ask us to expand,” Eppinger said. “Our footprint will grow.”

Hub International, Rettenmier

Chicago-based Hub International Ltd.’s Northwest operating unit acquired the assets of Rettenmier Benefits Group Inc., an Everett, Wash.-based employee benefits consulting and insurance brokerage firm serving the Pacific Northwest.

Acquisition terms were not disclosed.

Rettenmier employees will join Hub Northwest and continue to operate from their current Everett office. The new location expands Hub Northwest’s presence to a new territory north of Seattle.

Cincinnati Financial, Moody’s

Cincinnati Financial Corp.’s lead property/casualty insurance subsidiary, Cincinnati Insurance Co., appointed Moody Insurance Agency in Denver as the first independent agency in Colorado to market its business insurance policies and services. Cincinnati Insurance executives initiated the relationship at the company’s headquarters, welcoming agency representatives Brad Moody, president, and Kim Burkhardt, director of sales development. This marks the 36th state of operation for the insurer.

Cincinnati also plans to enter its 37th state, Wyoming, later this year. The company anticipates making eight independent insurance agency appointments in Colorado and Wyoming in 2009.

President and CEO Kenneth W. Stecher said, “We’ve had our eye on Colorado for several years. Operating within its stable regulatory and business climate, we see Colorado as an opportunity to support our goal of growth and diversify our geographic footprint, mitigating catastrophe losses.”