Balboa Insurance Group, a subsidiary of Countrywide Credit Industries Inc., has agreed to provide insurance services to the customers of Fairbanks Capital Corp., a company that services bad home loans.
Through the agreement, which was announced last Tuesday, Irvine, Calif.-based Balboa is to supply Fairbanks with lender-placed insurance products, as well as many of the services that keeping track of its mortgage customers' insurance status requires.
Fairbanks Capital of Salt Lake City handles third-party subservicing of impaired-credit loans and special servicing of nonperforming loans for financial services clients such as mortgage finance companies, investment and commercial banks, and bond insurers.
Lender-placed insurance is used in both the mortgage and auto businesses "to the extent that a borrower can't get insurance," said Drew Gissinger, a managing director and the president of Balboa Insurance.
The California company specializes in various kinds of insurance products through financial institutions, including term life; accidental death and dismemberment; credit, homeowners, and renters coverages; and other products.
Mr. Gissinger said his company works with Wells Fargo & Co., Bank of America Corp., American Express Co., Citigroup Inc., and others. "We have partnerships of one form or another with almost all the major financial institutions," he said.
Balboa is well-positioned to help financial institution clients with insurance products and services, Mr. Gissinger said, because of its ownership by Countrywide, a Calabasas, Calif., mortgage lender.
"By the nature of our parent, we have a very thorough understanding of what our business partners do every day because we ourselves as an organization do it every day," Mr. Gissinger said.
Countrywide is also a client, Mr. Gissinger said - and a pretty demanding one. He said the insurer works with its lender parent to develop products and services that fit Countrywide's needs and then brings them out to its other clients.
The Balboa Insurance Group comprises Balboa Insurance Co., Meritplan Insurance Co., Newport Insurance Co., Balboa Lloyds Insurance Co., Balboa Life Insurance Co., and Balboa Life Insurance Co. of New York.
Balboa was bought by Countrywide in 1999, but at the time it mainly was a large provider of single-premium insurance, an often-criticized product that lenders sell to subprime customers to assure mortgage payments if they die or become disabled.
The company decided to get out of single-premium insurance, however, and reinvent itself as a provider of various insurance products through other financial institutions.
Mr. Gissinger said Balboa expects net premium of $500 million this year and is on track to break $700 million next year. "We're clearly on our way to becoming a billion-dollar insurance company," he said.
Its most recent expansion was into traditional homeowners products, which Mr. Gissinger said was done as many insurers were reducing the amount of homeowners insurance they write.
He said Balboa sells insurance from more than 40 carriers through its own partnerships and through two sister companies: Countrywide Insurance Services Inc. and DirectNet Insurance Agency Inc.
Balboa's expansion into new product lines mirrors a continuing initiative by Countrywide, which has been trying to diversify into new product lines, Mr. Gissinger said.
Countrywide has been expanding its nonmortgage businesses, including insurance, investments, and consulting services. The company said in April that its nonmortgage subsidiaries accounted for 22% of corporate earnings.
