Folksamerica Acquires Esurance
10 October 2000
Folksamerica Acquires EsuranceLeading Internet-Based Provider of Personal-Lines Insurance Becomes Subsidiary Of Folksamerica Holding Company NEW YORK, Oct. 10 Folksamerica Holding Company, Inc., a subsidiary of White Mountains Insurance Group , announced today that it has acquired a majority interest in Esurance Inc., a leading Internet-based provider of personal-lines insurance. Under the agreement, Esurance becomes a subsidiary of Folksamerica Holding Company, Inc. Financial terms of the agreement were not disclosed. Esurance will remain an independent entity under the Folksamerica Holding Company and will continue offering personal auto insurance through its online service (http://www.esurance.com). Esurance currently sells personal auto insurance in 24 states, which represent more than 70 percent of U.S. drivers. "Esurance represents a promising new direct model for the insurance industry," said Steven Fass, CEO of Folksamerica Holding Company. "The Internet is still an emerging distribution channel for insurance and Esurance is a leader in this growing space. The company has one of the few Internet-based models that delivers on the promise of technology, which is to reduce costs and provide a convenient experience for consumers." Esurance is a complete quote-to-claims online insurance provider that combines the service of an agent-based insurance company with the competitive rates of a direct insurance provider. Esurance enables customers to get expert advice, instant quotes, comparison quotes from other providers and immediate coverage, but also lets them manage their policy online at their convenience. Esurance customers can instantly add a driver or car to a policy online, change their level of coverage, print out their policy or proof of insurance card, or contact an insurance advisor via phone, chat or email at any time. "Folksamerica provides the financial stability, experience and resources we need to take our business to the next level," said Jean-Bernard Duler, chairman and CEO of Esurance. "This is an exciting time for the insurance industry and we are very pleased to have the leadership of Steven Fass and his team at Folksamerica behind us as we continue growing our business." Esurance currently offers personal auto insurance in 24 states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Virginia, Washington and Wisconsin. Esurance is licensed to market policies in 48 states and plans to continue expanding its business to additional states this year. Folksamerica commenced writing business in January 1980 as one of a host of newly formed, foreign-owned reinsurers capitalized with minimum surplus. While virtually all of the others floundered and failed, Folksamerica, after some poor results in the early 80's, has prospered. In 1991, recognizing that surplus size and critical mass would become an increasingly important business issue, Folksamerica launched an aggressive strategy to increase the Company's resources and capacity through the acquisition of select broker market companies such as MONY Reinsurance (1991); Christiana General Insurance (1996); Great Lakes Reinsurance (1997); USF Re (1999); and Risk Capital Re (2000). Potential Market According to research from leading analyst firms, auto insurance will account for a majority of all online insurance sales during the next several years. In a recent report, Forrester Research projects auto insurance sales over the Internet will reach an estimated $11.8 billion by 2004, and account for 90 percent of the total online Property/Casualty insurance sales.