The local division of Westinghouse Electric Corp. announced yesterday a seven-year partnership with a unit of New York Life Insurance Co. that could provide $50 million to expand Westinghouse's home security business.
The arrangement calls for an equity investment from NYLIFE Bridge Investor Inc., a subsidiary of New York Life, and a loan from a London bank, both of which Westinghouse would use to buy the accounts of regional security companies across the country, said Ric Campbell, manager of Westinghouse Electronic Systems Group's security systems unit in Linthicum. An account is a home with a security service.
The Linthicum division moved into home security in 1990 as part of a diversification to lessen its dependence on military contracts and expand into a business monitoring millions of homes across the country.
The service was launched in the Dallas area and recently became available in Maryland.
Mr. Campbell said that under the agreement with NYLIFE, the insurance company would own the security accounts that were bought and Westinghouse would receive a fee for managing them.
After collecting the service fees, Westinghouse would keep an operating fee and pay the rest to NYLIFE, some of which would be used to repay the bank loan.
Westinghouse expanded into the security business when it bought Schlage Electronics from Ingersoll-Rand Co. in 1990.
Westinghouse said it is the nation's fourth-largest residential alarm monitoring company. The company, which has 115,000 home security customers, said the arrangement with NYLIFE is expected to add 60,000 customers this year.
Mr. Campbell said Westinghouse is hoping to expand its home security business and eventually be in more than a million homes.
"That will take a lot of capital," he said. "This is a way of growing without putting out a lot of money."