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Metropolitan Buys J.C. Penney Casualty Insurance

June 8, 1989 GMT

WARWICK, R.I. (AP) _ Retailing giant J.C. Penney Co. Inc. will pull out of the property and casualty insurance business by selling its Ohio-based subsidiary to Metropolitan Property and Casualty Insurance Co. for an undisclosed price.

Penney would keep its life insurance subsidiary, spokesman J. Duncan Muir said from the retailer’s Texas headquarters. Unlike rival Sears, Penney had been unable to produce a satisfactory package of financial services that it could sell through its stores, Muir said.

″The direction of our company is to become a department store. We found that people did not choose to make financial decisions at the same time they were shopping for apparel,″ he said. ″We tried other things to make a complete financial package, and it just didn’t work for us.″

Metropolitan, a subsidiary of Metropolitan Life Insurance Co. of New York, probably would keep Penney’s over-the-counter insurance sales force in place for up to 18 months after the expected closing of the sale later this summer, spokeswoman Liz Ostrowski said.

Those operations eventually would be folded into Metropolitan’s existing sales force of agents, direct-marketing specialists and Century 21 real estate agents, she said.

Less certain was the future of 770 employees at J.C. Penney Casualty Insurance Co. headquarters in Westerville, Ohio, near Columbus. Metropolitan would keep a service center there, but staffing levels had not been decided, Ms. Ostrowski said.

″We’re going to provide all employees with opportunities to continue″ with Metropolitan, she said.

Metropolitan, which writes most of its business in the Northeast, wants to expand to the Midwest and South, Ms. Ostrowski said. Penney wrote nearly half its premiums in 1987 in Ohio and California, with other significant amounts in Pennsylvania and Georgia, according to A.M. Best Co., an industry rating service.

Penney Casualty lost $7 million on premiums of $168 million last year, about 80 percent of it in auto insurance, Muir said. It had approximately 350,000 policies in force.

Metropolitan Property and Casualty earned $40 million on premium income of $543 million. It had 1.1 million policies, Ms. Ostrowski said.

Best gave Penney a B-plus rating last year, which one expert said is generally the lowest rating accepted by insurance brokers. Metropolitan improved from B-plus to A-minus.