Wesco Financial, parent of Mutual Savings & Loan in Pasadena, said Wednesday that it has ventured into the property insurance business with formation of a subsidiary that it expects to generate $60 million in first-year revenue.
Wesco said its new company, Wesco-Financial Insurance, began operating Sept. 1, when it agreed to reinsure about 2% of the policies issued by Fireman's Fund Insurance of Novato, Calif. Fireman's Fund paid Wesco a premium for the four-year reinsurance coverage.
Fireman's Fund, a subsidiary of American Express, currently is seeking to raise capital by offering the public up to 49% of its common stock. It also has had massive infusions of capital from American Express since December, 1983, and has been tightening its underwriting standards and raising premiums in an effort to stem the tide of red ink.
Wesco expects to profit from these changes in Fireman's Fund and from the generally improving profitability of the property-casualty insurance field, which has amassed a string of record losses.