Insurance Company Groups -1969

Richard de R. Kip, Ph.D., C.P.C.U., C.L.U.

Professor of Risk and Insurance, The Florida State University, Tallahassee

Approximately two years have passed since the author wrote an article on "Insurance Company Groups." This note brings the summary data up to date.

Total Number of Groups

The number of groups identifiable in early 1969 was 549 involving 1,770 insurance companies. This is an increase from 519 groups of 1,569 insurance companies identified in early 1967. This is an increase of 30 groups, or 6 percent, and an increase of 201 companies, or 13 percent.

The number of companies in the average group is still close to three, but has increased fractionally from 3.02 to 3.24. The modal figure is unchanged at two companies, as 321, or 58 percent, of the groups consist of only two companies. The range has increased: it was from 2 to 28 companies in 1967 and is now from 2 to 32 companies.

The Transamerica Group lost its position of having the largest number of insurance companies. The Continental Insurance Companies group has grown to 32 companies. In the past biennium it has added at least four formerly independent groups of insurance companies, namely, American Title (five companies), Glens Falls (three companies), Pacific of New York (three companies), and Phoenix of London (three companies).

There have been numerous other instances of several groups coming under the control or management of one group. Presently in prospectus is a new American International Group, Inc. It will be comprised of what were at one time five separate interests: American International Rein

Dr. Kip's biographic information does not differ significantly from that published in the June ANNALS, p. 111, except that he has spent the past summer working for the American Institute of Property and Liability Underwriters, his "old home."

1 Kip, Richard de R. "Insurance Company Groups," THE ANNALS, VOL. 20 (1967), No. 2, p. 101.

The Society of Chartered Property and Casualty Underwriters, 1969. All Rights Reserved.

surance Company, American Life Insurance Company (plus a subsidiary life company), American Home Assurance Company (which owns four other insurers), National Union Fire Insurance Company (and its four affiliated insurers), and New Hampshire Insurance Company (with its six affiliated insurers). One of the conglomerates, Teledyne, has really "moved into" the insurance field. It has obtained control of the following Groups: United Insurance (four companies), Argonaut (three companies), Great Central (two companies), and Trinity Universal (two companies). In addition, Teledyne has bought two independent companies, Financial Indemnity Company and Guaranty Reinsurance Corporation.

A comparative division of the 1967 and 1969 groups is as follows:

Types of Group

The 549 groups of insurance companies can be divided into three subsections, as follows:

Of the 1,770 companies, 719, or 41 percent, were life insurance companies and 1,051, or 59 percent, were non-life insurance companies. Measured against the 1967 data, not only did the total number of companies increase, but also the number in each category. The life company total increased from 582 to 719 and the non-life from 987 to 1,051.

Groups of Only Life Companies

The "life only" groups appeared in only five magnitudes, from two to six companies per group. The number of groups increased from 98 to 127, an increase of 29 groups, or 30 percent.

The increase in the number of groups does not mean that the 98 groups of the 1967 study were unchanged. Actually, only 55, or 56 percent of the 98, are the same as in 1967. The others have disbanded, decreased number of companies, added companies, replaced companies,

or affiliated with a non-life company and changed to the all-lines category. In brief, not only has there been a considerable increase in the number of groups of life insurance companies, but also there has been an even greater amount of activity within the groups themselves.

As before, most of the companies in the life-only groups were stock companies. Indeed, 298, or 97 percent, were stock. There were also five mutuals, three fraternals, and one assessment association.

Groups of Only Non-Life Insurance Companies

The number of non-life groups had declined in the past two years from 189 to 169, or by 11 percent. The number of companies in non-life groups decreased to a slightly larger degree, by 13 percent, from 460 to 401 companies.

A comparison between the number of companies per group follows:

As to the form of company in the non-life groups, the stocks are still the most common, but by a very small margin. The comparative data are:

Of the 169 groups in 1969, 67 were all mutual, 59 all stock, one all reciprocal, and the remaining 42 groups were combinations of two or more forms of insurers. The most frequent combination was that of two mutuals (58 groups). In order, followed two stocks (45 groups), one mutual and one stock (26), three stocks (8), three mutuals (6), and two mutuals and one stock (5). No other combination was found five or more times.

Approximately 66 percent or 125 of the non-life groups were unchanged during the 1967-1969 period.

All-Lines Groups

The total number of all-lines groups increased from 232 in 1967 to 253 in 1969. This is an increase of 21 groups, or nine percent. The number

TABLE 1

NUMBER OF LIFE AND NON-LIFE COMPANIES IN ALL-LINES GROUPS