Mortgage lender Countrywide Financial Corp. is tapping its Irvine unit to launch a push into the commercial insurance brokerage business.
The Irvine unit,Countrywide Insurance Group,plans to open a new operation at its Park Place offices in July.
By the end of the year the commercial insurance unit is expected to have about 25 workers, with another 50 expected to be hired within a year, the company said.
Calabasas-based Countrywide’s insurance unit offers auto insurance, life and disability insurance and health insurance, primarily to individuals.
It got into homeowners and renters insurance with its buy of Irvine’s Balboa Insurance Group Inc. in 1999. It moved the headquarters of its insurance operations to Irvine when the Balboa deal closed.
Countrywide’s commercial brokerage operations will offer workers’ comp, liability, property and auto policies from national commercial insurance underwriters.
David Kuhn, executive vice president of commercial insurance, was hired in September to build the commercial brokerage unit.
Kuhn was a regional president for St. Paul Travelers Cos. before joining Countrywide. Prior to that, he held executive positions with Hartford Specialty Co., Travelers, now part of St. Paul, and Aetna Inc.
“When we talked to most business owners about whether they were having problems with commercial insurance, they usually said, ‘Yes,'” Kuhn said. “So we saw getting into this as the next step.”
Kuhn’s unit will tap Countrywide’s clients, including Orange County’s crop of mortgage brokers and homebuilders, for business.
“In addition there are a lot of potential customers in the general commercial business like private schools, restaurants and furniture movers,” Kuhn said.
Last year Countrywide formed a commercial lending unit, from which it could draw potential clients.
Countrywide also plans to target public companies for directors and officers liability coverage, known as D & O;, which has become a big business since corporate governance reform in the wake of Enron Corp. and other corporate blowups.
“We are bringing in some expertise to handle D & O; coverage for the larger and more sophisticated clients,” Kuhn said.
Kuhn said the company’s target market will be accounts with premiums from $450,000 to $2 million.
The types of insurance policies it sells will depend on the kind of people Countrywide brings on board.
“If one guy I hire has a commercial contractors portfolio then we will get into that business,” Kuhn said. “We’ve been in the Southland market for over 12 years and we’re going to go out and try to attract the top talent.”
Kuhn said he will be looking to get three or four senior vice presidents with homebuilder and real estate brokerage practices.
He also is looking for someone who focuses on employee benefits as well as mortgage bankers and mortgage brokers.
Kuhn said he doesn’t believe the stigma from insurance carrier Marsh & McLennan Cos.’s price fixing settlement will have a huge impact on the company’s business.
“The commercial insurance business is so fragmented,the last number I saw from the Insurance Association of America is there were 35,000 insurance agents and brokers in the country. No one controls that much of the market,” Kuhn said. “Most people always think they pay too much for their insurance and they also question whether they are properly covered.”
Kuhn said he chose Irvine as the base of the commercial operations for a number of reasons beyond wanting to be near Countrywide Insurance’s headquarters.
“I selected Irvine because business owners like to live here and base businesses here,” he said.
Countrywide Insurance Group has about 500 workers in Irvine and 1,800 in the U.S. overall. Its parent, Countrywide Financial, employs 42,000 people nationwide and about 13,000 in Los Angeles and Ventura counties.
The new commercial insurance unit will be part of Countrywide Insurance’s existing offices at 3349 Michelson Drive in Irvine.
