American Modern Insurance Group plans to get out of the lender-placed insurance business, with a wind-down of the division set to take place over the next two years.
The Ohio-based residential property specialty insurer and Munich Re subsidiary said in an announcement that it is responding to challenges including decreasing premium volume and ongoing rate pressure. Faced with both elements, American Modern added “it has become clear this business model can no longer achieve acceptable returns in the foreseeable future.”
It is unclear how many jobs will be ultimately impacted by American Modern’s decision to exit lender-placed insurance, which provides banking and lending industries with insurance products and services. One hint: American Modern said it expects some “attrition and internal redeployment” to take place as it winds down division operations through the next 15-24 months.
“All affected associates will be treated fairly and with respect and, where possible, redeployed to other business areas,” American Modern Chairman Tony Kuczinski said in prepared remarks. He added that affected employees will also be able to tap into a comprehensive benefits packages along with outplacement and other support services.
American Modern employs 1,400 people, approximately 325 of which support its lender-placed insurance business.
Another strategy clue: American Modern said that exiting the LPI business will allow it to redeploy resources to its profitable personal lines segment, which represented about 80 percent of its business in 2015. The division is in the process of implementing a state-of-the-art business-processing platform, the insurer said.
Source: American Modern Insurance Group