Metropolitan Life Insurance Co., which last year acquired Newport Beach-based Century 21 Real Estate Corp. for $250 million, has formed a new subsidiary in Irvine to provide a full range of Metropolitan insurance products to Century 21 home buyers.
Metropolitan Life Vice Chairman Pierre Maurer said Monday that he feels that in five years "it is not overly optimistic" to project that Century 21's franchises, now totaling 6,500 offices in the United States, Canada and Japan, will generate half of Metropolitan Life's new insurance business.
Also, Richard J. Laughlin, president and chief executive of Century 21, said that as a result of that company's marriage with New York-based Metropolitan Life, Century 21 is more aggressively getting into the mortgage business. In collaboration with Metmore, a Los Angeles-based mortgage subsidiary of Metropolitan Life, Century 21 is restructuring and beefing up its own fledgling mortgage operation.
Laughlin said that by cooperating with Century 21 franchises, which are involved in about 700,000 real estate sales a year, Century 21 could easily become the "largest mortgage banker in the country." He estimated that the company "conservatively" will sell $6 billion in mortgages annually, of which about two-thirds will be placed with Metmore.
The recently formed Metropolitan Life subsidiary called Century 21 Insurance Services Inc., which exclusively serves Century 21 customers, has moved into an Irvine office tower just built by the parent corporation. And in November, Century 21's international headquarters and its mortgage subsidiary plan to relocate to the new $35-million, polished granite building from their offices in Newport Beach. In all, Century 21-related businesses with a combined work force of 300 will occupy eight of the building's 13 floors.
Samuel J. Foti, president of Century 21 Insurance Services, said he is building a sales force "from scratch" to work with the real estate franchise offices. Foti said the new insurance subsidiary began providing services on a pilot basis to Orange County and San Diego franchises in July and to a portion of New England in August. He said that within two years he expects to have 650 field representatives deployed nationwide.
Century 21 officials say their franchises are "excited" about the "one-stop service" they can provide to customers, who upon buying a home generally need to purchase homeowner insurance and sometimes mortgage redemption insurance. Foti said Century 21 real estate representatives can sell the insurance themselves and take a commission or refer potential customers to the special sales team provided by Century 21 Insurance Services.
Maurer said Century 21 has proven to be "a perfect fit" with Metropolitan Life, in part because both cater to the same middle-income families. He estimated that Century 21 franchises will help Metropolitan Life sell 125,000 more homeowner policies a year.
While homeowner insurance is the most logical service that Metropolitan Life can provide to Century 21 customers, Maurer said, Century 21 Insurance Services will also offer other kinds of Metropolitan Life insurance products.
Sophisticated Computer System
Those who buy or sell homes through Century 21, Maurer said, will be logged into a sophisticated computer system and over the years will receive insurance offers in the mail.
Maurer said Metropolitan Life is in the process of "piggy-backing" a new computer system on its own that, among a myriad of management and customer services, will give Century 21 real estate salesmen immediate access to information about the latest mortgage terms and insurance policies available. He said the franchise offices will pay $300 a month for the service.
Century 21 is also pushing ahead with plans to expand its international operations. Early next year, he said, the company intends to start doing business in the United Kingdom, where it will associate with London-based Albany Life Insurance, another Metropolitan Life subsidiary. Also next year, he said, Century 21 will move into Australia and either France or the Caribbean.
In addition, Laughlin said, Metropolitan Life's financial support may help Century 21 accelerate its plans to buy back Century 21 master franchises throughout the United States.