German American Insurance Company was formed in response to a need among business owners for reliable risk management solutions during the late 19th century, issuing its inaugural policy in 1872. Under Carl H. Lindner Jr.’s leadership, Great American established itself in specialty commercial property and casualty businesses across North America.
German American Insurance Company
German American Insurance Company provides both individual and commercial lines of insurance policies as well as investment and wealth management services from its offices in Jasper, Indiana. German American’s employees work to establish strong customer relationships while offering financial solutions that benefit both them and their customers.
Carl H. Lindner purchased Great American in 1973 before merging it with NGC in 1980, later purchasing American Financial Group’s insurance business as well. By 2020, Great American had written $5.3 billion in gross written property and casualty premium – most of it in specialty lines such as excess and surplus liability, executive and professional liability, M&A liability targeted programs and workers’ compensation coverage; property and transportation (39%) and specialty financial (11) premiums made up the remainder.
At its establishment in 1910, German American was situated in Jasper – a town rich with German heritage that inspired both its name and business leaders’ decision to form and open it. William Heins was instrumental in raising an early subscription toward German American’s capital needs through connections that he leveraged.
German American bank quickly outgrew its initial office. Clem Eckstein became president in 1912 and was succeeded two years later by O. Leo Beckman – son of founder Carl Beckman. O. Leo Beckman was shaken to his core during 1906 San Francisco earthquake but German American was unshaken, paying out all its claims without fail.
Even after experiencing losses, the company steadily expanded and flourished. After World War I changed national sensibilities and its name was officially altered to Great American Insurance Company in 1918. For over 100 years since, its strength and integrity set it apart from competitors; over time it became a household name in America. Finally in 1999 it adopted its current corporate logo featuring an American eagle painted in red, white, and blue colors as its symbolism.
National General Corporation
National General Corporation is an industry-leading provider of auto, homeowners and renters insurance. Their wide array of benefits includes discounts, easy policy management tools and 24-hour claims services. Furthermore, National General complies with industry standards while upholding ethical practices with strong ethical compliance practices – further contributing to their outstanding reputation. Furthermore, they actively participate in charitable efforts which help strengthen their company.
Allstate anticipates the acquisition of National General will significantly expand their revenue growth and reach among independent agents, generate cost synergies from this deal, invest in their digital capabilities and develop innovative products; becoming one of the world’s top insurers as a result of it all.
Allstate has long been recognized for providing its customers with quality coverage, and with the acquisition of National General it will further solidify its standing in the auto insurance market. Furthermore, this move will expand Allstate’s presence in home, commercial, Medicare supplement insurance markets as well. Allstate hopes that with its purchase of National General it can expand upon these efforts for customers of older age.
Allstate Insurance Group announced it has acquired National General to expand its personal property-liability offerings and increase distribution through independent agents. The deal is scheduled to close early 2021, using existing cash on hand as financing; and should prove beneficial for Allstate’s earnings per share and return on equity over time.
COVID-19 pandemic has proven challenging for insurers, and Allstate saw sales decline 8.3% during its first quarter 2020 sales period. Therefore, Allstate acquired National General to expand their presence in higher risk auto policies and lender-placed policies – this should enable Allstate to become one of five independent agent insurance carriers.
Allstate is a leader in the automotive market, and their customer service department is widely known for quickly responding to customers. Additionally, Allstate offers various perks, such as paperless invoicing and free car club membership for its members; similar to well-established vehicle clubs it provides benefits like free transportation services and discounted roadside assistance services as well as towing services for drivers.
American Financial Corporation
The American Financial Corporation was a diversified holding company with interests in property and casualty insurance, life insurance and tax-sheltered annuities as well as savings and loans, real estate investments, food products, television and radio operations, petroleum marketing and crude oil production. Based in Cincinnati, Ohio.
Carl Lindner founded this company in 1959, initially offering only savings and loans as their primary business. Over time, their operations expanded to offer financial services as well as specialty commercial property and casualty insurance policies in niche markets – by 2021 there were over 35 market-leading insurers operating within their network.
In 1962, GAIC purchased Dempsey and Siders Agency – a property and casualty insurer. Soon thereafter in 1963 it branched into life insurance through United Liberty Life before finally buying Great American Insurance Company in 1975; at that point in time GAIC was highly profitable, writing nearly $578 Million net premiums that year alone! Due to debt concerns GAIC needed funds and sold some small operations such as Cincinnati Enquirer Reinsurance Company as a way out.
At around this same time, GAIC implemented significant rate increases that helped improve its bottom line. By the mid 1980s, property and casualty insurance comprised 27% of AFC’s revenues with life and annuities contributing an additional 8%. By 1987, Great American Life Insurance Company generated almost all its premium income through individual tax-sheltered annuities.
By 2021, GALIC had become the leading producer of individual tax-sheltered annuities in the US and one of the top 10 life insurers. Nearly all its annuity premiums related to teachers-specific annuities. Furthermore, GALIC boasted a robust retail life insurance business selling products such as term assurance, universal life, whole life and variable annuities; their annuity business served as the main driver for earnings at AFC’s earnings; however they faced increased competition from larger competitors who were eating into market share over time despite GALIC’s best efforts at maintaining market leadership over time.
American Financial Group
American Financial Group is a financial services firm offering an array of insurance and investment products and related services. Their core business is life and annuity insurance; in addition, other forms of personal lines of coverage as well as commercial property and casualty coverage are also provided by American Financial Group based out of Cincinnati Ohio with over 6,800 employees globally.
AFG announced in May 2021 it would acquire Crop Risk Services from AIG for $240 million as part of its strategy of targeting specialty commercial classes with products, services and distribution methods that stand out. This acquisition would supplement AFG’s existing specialty commercial business in Great American Insurance Group.
AFG will continue to oversee this new business and is projected to realize an estimated pretax gain between $60 million – $130 million, depending on any closing adjustments that might occur. As such, this transaction should have minimal or no negative ramifications on AFG’s financial ratings.
MassMutual’s acquisition of AFG’s annuities business represents a strategic move, allowing AFG to concentrate its resources on core life insurance and retirement products while expanding MassMutual’s retirement solutions capabilities. Integration between businesses should occur within two years. Furthermore, MassMutual gains access to AFG’s significant fixed annuity reserves as part of the agreement allowing them to expand their retirement solutions capabilities further.
AFG recently completed the sale of its supplemental benefits business to Cigna Corporation (NYSE: CI). This sale included all legal entities which comprised substantially all of AFG’s run-off long-term care business. AFG’s acquisition was subject to regulatory approvals and other customary closing conditions, upon which completion it will enable AFG to use any remaining capital resources to continue expanding its core life and annuity business. AFG will also contribute up to $35 million of capital on an as-needed basis in order to maintain specified surplus levels at closing of this transaction. As compensation, AFG will receive warrants allowing it to purchase two million shares of HC2 common stock; this transaction is scheduled to close by the second quarter of 2021.