In the 1980s and early 1990s, multiline insurers were prevalent throughout the industry. The large companies sought to capitalize on cross-selling of products and economies of scale. But a funny thing happened on the way to continued success. "The beginning of the end for multiline insurers came in the late 1980s with the advent of equity-linked products," said Michael G. Paisan, an equity analyst with Legg Mason Wood Walker. Combining property/casualty and life industries worked better when the life products were mainly life insurance; the new model meant insurers had to become hybrid asset management companies, he said.

Under those circumstances, the two industries didn't mix as well.The result was that many companies began to sell noncore operations and narrow their focus to the lines of business with which they had the most expertise.

A few, however, determined to stay with their multiline approach. Three of those companies stayed the course so well that they achieved top 10 status for 2002 in both the property/casualty industry and the life industry. American International Group ranked third in property/casualty and second in life; Hartford ranked 10th in property/casualty and sixth in life, and Nationwide ranked seventh in property/casualty and 10th in life. The profiles on the following pages reveal some of the strategies and strengths that have kept these companies in the lead.

"It's very difficult to manage both sides," Paisan said. "The products are manufactured differently; the exposures and liabilities are different; the distribution is different." The best way to approach multiline management is the model Hartford uses, he said. "They're still standing because they managed each side of the business separately. They didn't try to commingle."

As time goes by, multiline insurers may find themselves a smaller group. "In the near future, companies will continue to become more narrowly focused," Paisan said. "Then the most narrowly focused will be acquired by others, but you probably won't see any cross-buying. Companies will stay faithful to property/casualty or life."

see "Net Premiums Written, Top Property/Casualty Writers--2002"

see "Admitted Assets, Top Life Writers--2002"