Independent agents live up to their appellation—they are independent. So when we heard about an agency that formed through the merger of 12 independent agencies, we were intrigued. And the fact that these 12 agencies all were the largest in their respective communities added to our curiosity. Could you really bring together agencies that had long histories of independence—two for more than 100 years and the others for more than 50—and make it work?

The answer appears to be yes.

After 18 months of discussions and planning, the 12 agencies representing seven ownership groups merged and formed SouthGroup Insurance Services headquartered in Ridgeland, Mississippi, in 2002. There was a lot of give and take and, at times, it seemed a lot like herding cats. But there was one common factor that kept every agency owner at the table—all wanted to do what was best for their clients and they realized that a merger would benefit their clients by creating greater efficiencies that would allow for enhanced risk management services. It would also increase their marketing clout with their insurance companies.

And that has happened as Jimmy Newquist, vice president-commercial lines, points out, “Today, we are at a preferred level with most of the companies. That allows us to have some preferential treatment with marketing and placement, and preferential revenue agreements. It’s beneficial for us and for our clients.”

When SouthGroup finally opened its doors on January 1, 2002, it had a business plan, a strategic plan and a mission statement, all of which centered on the client. “Integrity was an important part of each of the agencies that merged to become SouthGroup,” Ronald (Ronnie) Tubertini, president and CEO, points out. “We made it clear in our mission statement that dealing with integrity in a partnership with our clients, companies and other vendors would be one of the most vital underpinnings of the new agency.”

The partners also agreed on a way of doing business that became known as the SouthGroup Way. “We offer a consultative approach to our customers that involves complete insurance coverage review and risk analysis on a continuing basis,” Ronnie notes.

“This process allows our clients to plan ahead from a business standpoint, rather than facing last-minute decisions at renewal time. We see our job as trusted advisors, helping our customers identify, evaluate and manage their risks, not as purveyors of insurance. We treat insurance as a tool that can help our clients reach their risk mitigation goals. We also offer the same kind of professional advice and counsel to our personal lines clients.”

And that approach has paid dividends. Since its start in a soft market, SouthGroup has grown 65% to reach total revenues of around $13.2 million, with 89% coming from property/casualty commissions and 11% from group employee benefits. The agency writes about $75 million in commercial lines premium and $25 million in personal lines. Some of the growth has come from three agency acquisitions and the addition of another agency to the group. However, most of the growth is organic.

Equally important to the partners was community involvement. Each of the agencies played a strong role in its community prior to the merger, and the principals wanted the merged entity not only to support this effort, but also to enhance their ability to give back to their communities and to the industry. As Ronnie points out, “We consider it important that we are citizens first. Community involvement is a way of life for every local SouthGroup branch, from leadership roles in local chambers of commerce and United Way campaigns to coaching Little League baseball.” This continued a tradition that was part of each of the agencies that comprised SouthGroup.

However, the partners also worked on developing a program that went beyond the local efforts. “Two years ago,” Ronnie says, “we initiated the SouthGroup Make-A-Difference 5K Race. This is a run or walk starting and finishing at our home office headquarters in Ridgeland. Some of our partner companies participate as associate sponsors, our employees staff the race course, and for each of the past two years, we have presented a check for $20,000 to Friends of Children’s Hospital, which supports the Blair Batson Children’s Hospital at the University of Mississippi Medical Center.”

At the same time, the principals also are involved in giving back to the insurance community. Five of the current principals are both past presidents of the Independent Insur-ance Agents of Mississippi and past national directors of the Independent Insurance Agents & Brokers of America (IIABA). Ten other IIAM presidents came from agencies that merged to form SouthGroup.

SouthGroup board member Shaw Johnson is currently vice president of IIAM and is going through the chairs of the association. He will represent the fourth generation of his family to serve as president of IIAM. His great grandfather, J.H. Johnson, was a national association president and IIAM’s most revered award is named for him.

Ronnie has received the Sidney O. Smith Award from IIABA for his work in government affairs, including serving as chairman of the Government Affairs Committee for three years. He later served as chairman of the Professional Liability Committee for four years. This past April, he received the association’s highest award, the Woodworth Memorial Award.

In addition to increased marketing clout and enhanced involvement with their communities, the merger also allowed for some economies of scale. The headquarters, referred to as SouthGroup Central, handles the accounting, IT, and commercial and personal lines business development for each of the 18 branches. Accomplishing this centralization, however, wasn’t easy.

“There wasn’t a template for a centralized accounting department handling so many branches the way we wanted it done,” Ronnie says. “So we decided that the best way to handle it was to bring in an accounting professional to create an accounting department from scratch. We were fortunate to find Angie Barr, a CPA and MBA, who came from a company that owned several franchises. “Angie set up a new system for all of SouthGroup,” Ronnie continues. “It accounts for revenue and expenditures in a manner that fits the SouthGroup model.”

Angie, who is vice president of accounting and finance, points out that part of the system is determining the budget for each branch. “The budget is based on profitability with each branch treated as its own profit center. We don’t micromanage from the headquarters, but we do provide information, including trending and other financial analysis, to help them.

“For example, we create an income statement for each branch that compares its results to best practice standards for branches of that size using Big ‘I’ best practices combined with SouthGroup’s best practices,” she explains. “This is part of a board package that we provide every month to each managing principal. It includes a complete set of financial statements, cash flows, detailed account analysis, production reports, and comparisons to budget and prior year.”

Accounting also pays all bills, does payroll, and handles all the human resource functions.

The department has five-and-a-half full-time people “with every position cross-trained at least three deep,” Angie says, noting that this means “the branches don’t have to worry about who gets the information.”

Perhaps the most difficult change for some of the branches was the conversion to one management system. “Of course, about half the agencies were on one system and the rest were on another so there was no way we were going to able to please everybody,” Ronnie says. “And we often heard from the agencies that they were willing to go on a single system as long as it was theirs,” he adds wryly.

After extensive study of the options, the agency went with Applied Systems’ TAM. Cyndi Tullos, director of technology, points out that “Applied provided more flexibility for us, particularly in operating in a hosted environment. We use Venture Technologies to host our servers. We felt it was in our best interest to retain our data in the agency and Venture provides us with the vehicle to do that.

“Over the first year, we put one branch per month on the system,” Cyndi notes, adding, “We had tremendous cooperation from each of the branches and from Applied and Venture.

“For document management, we didn’t find what we needed, so we created our own system and formed a technology company called Blue Goose. The result was the IChannel Agency Document Management System.  Blue Goose was spun off and is being used by other agencies,” she says.

SouthGroup also provides an intranet that has documents, marketing material, employee forms and a forum for employees and customers where questions can be reviewed and answered. “This is a great communication and collaboration tool for us,” Cyndi points out. “It is easily searchable so if a question about an unprotected dwelling has been answered, it is available to every one of the agency’s 142 employees.”

Sales goals and support for the strategic plan are handled in the headquarters, with Jimmy Newquist, vice president-commercial insurance, and David Wall, vice president-personal insurance, heading up their respective teams. They are in charge of company and broker (MGA) relations and contracts. Sales goals also are set at the headquarters.

“We provide producer support including quarterly sales meetings and bi-monthly sales meetings via Web-based conference calls,” Jimmie notes. “We also have a separate bi-monthly Web-based meeting for CSRs that we think is unique in the business. Our CSRs really feel engaged in the process and understand just how important we view their contribution to the agency.

“We also have a Producer Academy,” Jimmy points out. “It is strictly sales training that is used mostly by new producers, although we usually have some veterans who want to brush up on their skills. The academy uses role-play to help producers develop the best way to approach prospects using the SouthGroup Way. That system was developed by the eight top producers who comprise our sales management team.”

Jimmy also goes on sales calls with producers when needed. “I’ve been to OSHA training and company training sessions and can help insureds with safety seminars and other risk management needs.”

On the personal lines side, “We work with our companies to develop marketing plans,” David says. “We serve as the resource point for all 18 branches, and that has been particularly important for hard-to-place accounts. We get a lot of activity in that area.

“One of the other things we are serious about is providing assistance to our branches. We provide tools and resources to our branches for growth and product knowledge.  We complete individualized marketing plans for each branch. Personal lines growth is organic within the departments, so we look at workflows and procedures.”

“David continues, “My job is to keep the staff motivated and to find areas where we can utilize the SouthGroup Way in personal lines. For example, we have worked hard to increase our knowledge about different risks, like earthquake and flood, for which people may need coverage. For our upscale clients, we also provide risk management services on an ongoing basis.”  The Personal Lines Department also employs bi-monthly Web-based meetings for CSRs.

The agency also is developing a new program utilizing TAM that will help the efforts to cross-sell current clients.

We at Rough Notes are proud to recognize SouthGroup as our Marketing Agency of the Month. Their adherence to core principles that focused on service to clients and community exemplifies what is best about the independent agency system and is one of the reasons that we are convinced that it will continue to be the premier distribution system for risk management services for the foreseeable future.