SBU executives include (left to right) Peter Ewend, Kurt Ewend, Dutch VanDerwill and Jim Kesseler.
Saginaw Bay Underwriters (SBU) traces its roots back 135 years to a time when the Saginaw River basin in Michigan was one of the major lumbering areas in the country. In fact, the area is credited with providing most of the lumber used to rebuild Chicago after Mrs. O'Leary's cow initiated the radical remodeling of the city. SBU was founded in Saginaw in 1863 primarily to sell insurance to the mills in the area.
The agency expanded along with Saginaw Valley, adding coverages and expertise to best serve the people in the area and the newly emerging industries. Today, it is one of the largest independent agencies in Michigan with offices in Saginaw and Bay City and total premium volume of around $52 million. Sixty-five people are employed in the two offices.
We talked to the members of the agency's executive committee about how it achieved what has been some rather remarkable growth over the last couple of decades. Kurt Ewend, CPCU, chairman and CEO, says that the impetus really came around 1970 when two agencies in Saginaw merged to form the current SBU. The effort was headed up by three principals--Kurt, Frank Johnson and Lou Hanisko.
Kurt had joined the agency in 1959 and, at that time, revenues were only around $250,000. The merger more than doubled that. Then an aggressive marketing program that consisted principally of "a lot of hard work by a lot of good people" accelerated the agency revenue to its current level of some $5.7 million. Frank retired several years ago and Lou, who had been chairman and CEO up until the end of 1997, decided to "slow down" and resigned as an officer but continues as a salesman in the agency.
Following the merger in 1970, a number of additional acquisitions occurred that "brought us some key people," Kurt adds.
Peter Ewend, CIC, executive vice president, says the agency's commercial lines effort, which accounts for 55% of premiums (the remainder comes from personal lines--20% and employee benefits--25%), focuses primarily on three key areas--contractors, manufacturers and professionals. The agency becomes intimately involved in the business associations for these industries, both in order to develop relationships and to develop and maintain an expertise in the business. The agency belongs to the Association of General Contractors and has a workers compensation program with the Home Builders Association. On the manufacturing side, it belongs to the Saginaw Valley Manufacturers Association and the Michigan Manufacturers Association.
A win-win situation
These association memberships have paid off in many ways. The visibility at meetings certainly enhances the agency's position when approaching prospective customers who are members. "Machine shops, for example, represent one of our bread and butter businesses," Peter notes. "We've been referred by our customers to businesses that are not in the association. When that happens, we recommend the association to that customer. It's a win-win situation. We help them get new members and they help us get new customers.
"The professional programs evolved from business produced by our forefathers who had served on hospital boards," Peter notes. "Naturally, these hospitals asked them about their insurance needs, and they investigated the market and developed the necessary expertise. Larry Sims, CIC, senior vice president, points out that "other opportunities came along because we were able to help these hospitals." Today, the agency provides coverage to hospitals, physicians, accountants, architects and other professionals.
Peter continues that "George Ayotte (senior vice president) has been instrumental in helping to identify other niche opportunities we can go after. He works with the companies to find markets in which they are interested, particularly business that normally is hard to place, and is located in our marketing area (which includes most of mid-Michigan). We then match that niche with a specific producer who will become a specialist in that field."
"When the banks came on the scene a couple of years ago, our key producers and board (decided) we wanted to remain a locally owned, strong regional agency.
--Kurt Ewend
Personal lines success
Ward "Dutch" VanDerwill, president, says that "personal lines is another area where we have recently enjoyed strong growth and good success. Traditionally," Dutch continues, "personal lines was handled by our CSRs but a few years ago, we hired three producers--Connie Donnelly, Mark Fuller and Polly Thomas--to focus strictly on personal lines." Tom Weadock, executive vice president, heads up the marketing effort of the agency's Personal Insurance Center.
Service of the personal lines accounts remains with the CSRs. The producers are dedicated purely to production.
Each producer came to the agency with personal lines experience. "They'd operated at desks and know personal lines rating and have a knowledge of the personal lines systems," Dutch says. This approach has resulted not only in an increase in the number of stand-alone personal lines accounts, but "we've also had increasing success in cross-selling personal lines to commercial customers," Dutch concludes, adding that the employee benefits group which includes Carrington Beach Day, senior vice president; Robert Sidney, CLU, ChFC, LIC, senior vice president; and Arleen Schrank, CLU, vice president, also has had excellent success in cross-selling.
Giving something back
"Involvement in the community is another area that is critical to our success," Kurt points out. Employees at the agency are involved in numerous volunteer efforts. They serve on Chambers of Commerce and a number of community boards as well as participating in a St. Patrick's Day run. "We encourage them to run for elective office," he adds. "These efforts penetrate our business into the community and give us the opportunity to give back some of what we are taking."
The agency's involvement in the community also extends to Michigan's youngest state university--Saginaw Valley State University. The university was started in the 1960s and has about 8,000 students, including a number of SBU employees, who are enrolled in leadership classes there. Saginaw Bay Underwriters, as a way of giving back to the area, has endowed a business scholarship at the university on behalf of its employees. The university is a "valued insured," as well as an important part of the Saginaw community.
Another way in which the agency encourages employees to get around the community is with their quarterly meetings. "We bring employees from both offices together at an event that is held at different places in the community," Kurt explains. "It serves the dual purpose of exposing them to new places and exposing us to the community." These meetings have been held at a new community center, an historical society, a harness racing track, a new multi-million dollar planetarium in Bay City and, this summer, will be held on a new cruise ship running out of Bay City. "We might have a cocktail reception at one place and then go to a restaurant for dinner. We try and move employees around the community and offer events that are interesting and innovative." Motivational speakers often are part of these events.
One for all, all for one
The quarterly meetings are only part of an effort to maintain a high level of morale at SBU. "We try to make this a team effort where everyone wants to be part of our success," Kurt says, pointing out that "we have always made a point of being very fair with employees. We've been generous with benefits over the years." As a result, Kurt says, "we probably have the best staff here that we have ever had." The agency also created an ESOP, so part of the organization is owned by employees. The camaraderie is coupled with an atmosphere of friendly competition, with the salesperson and the MSR (marketing service representative) who bring in the most new business each month receiving a "small stipend."
Carrington Beach Day (seated), senior vice president of SBU, meets with Robert W. Sidney, senior vice president and Arleen Schrank, vice president.
This emphasis on team building is extremely important. The agency goal is to add a new producer each year. "These new people are mentored for the first couple of years," according to Jim Kesseler, CPA, chief financial officer. "This is an investment by the mentor to help the agency in the future," Jim continues, "and it would never work without the 'one for all, all for one' spirit we've been able to engender in the agency.
"This continual injection of new blood also serves as an ongoing perpetuation plan," Jim says, adding that in order for this perpetuation plan to continue, the agency needs to maintain a 5% annual growth rate. "Last year, we grew 7.7%."
Strong emphasis on new sales
Jim continues that, while the agency recognizes the need to retain its current customers (it enjoys a retention rate in the mid-90s), new sales are emphasized to help assure that the agency will achieve the growth rate it needs. "We recognize that there will always be some attrition that will require us to develop new business. We live in a mid-sized community where some of the local or regional businesses can be attractive acquisition targets for larger organizations that probably have coverage elsewhere. And competition from direct writers in the personal lines arena can result in some losses when our own companies' appetites change."
Kurt says the agency recently set up a sales center to track the new business effort. Producers are given names of potential customers that they must contact. "They must report back in to the sales center and must show what action has been taken."
The agency has a good sized database of sales prospects. Leads come from a number of sources, including referrals, cross-selling, D&B business lists and so on. "We sit down and go over them as a group. Quite often, someone knows the account and is able to provide an entree, but we also use cold calling." And they don't just depend on lists and outside sources. "We spend a lot of time in the community and often can spot a potential customer as we drive by a business by counting the cars in the parking lot. I know that sounds strange, but I actually found one of our largest accounts that way," Kurt says.
The agency just completed a move into a new 18,000 square foot, 25-year old building in Saginaw. The new facility "allows us the room we need for our future growth," Kurt says. It also provided the agency with another opportunity. In anticipation of that move, SBU started an automation study at the beginning of 1997. The year-long study identified the agency's computer capabilities and recommended improvements and upgrades. These were implemented with the move.
"We had 60 workstations with aging equipment. The study showed us where we could preserve the equipment that we had and identified how many new stations we would purchase each year. We hired a consultant to help us ferret out proposals from various computer firms." The agency uses an AMS/Sagitta system.
"We're still learning how to best use automation in our marketing effort," Kurt admits. "We have about 12,000 customers in the system and want to take advantage of that resource." One effort that proved successful was a letter concerning employment practices liability. "We sent out a letter on the subject that included local examples from the newspaper so that the recipients would be able to identify with the problem as something that is happening right here." The system sent out the letters and provided documentation that the customer had been contacted concerning the need for EPLI. "We got very positive feedback as a result of that letter."
Industry involvement
Kurt concludes by pointing out the importance of involvement with the industry. "We make a point of belonging to local, state and national organizations, including ARM of Michigan and the APPEX organization put together by Larry Marsh. We get good feedback from our peers that helps us decide if we are on the right track with some of our efforts, as well as identifying new approaches our peers are using that might be adapted to our agency."
Saginaw Bay Underwriters has the facilities, people and markets to move forward, Kurt maintains. "When the banks came on the scene a couple of years ago," he points out, "our key producers and board met and had a heart to heart talk about our future and came to the conclusion that we wanted to remain a locally owned, strong regional agency."
Clearly, SBU's story indicates it has succeeded and will continue to succeed in this effort. It has lived up to its "Vision Statement" to provide "the relentless pursuit of excellence for our customers, our employees, the community and our suppliers" and richly deserves recognition as our Marketing Agency of the Month. *
©COPYRIGHT: The Rough Notes Magazine, 1998