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The dream job Bob Restrepo lands at State Auto to rave reviews By Dennis H. Pillsbury “This is the job I always dreamed of having,” says Bob Restrepo, who took over the helm of State Auto Insurance Cos. on February 10, 2006, making him the fourth Bob to head up the companies. He succeeded Bob Moone, who took over from Bob Bailey in 2000. Bob Pein was the founder of the company. But Restrepo, despite his surname, was an unusual choice in that he came from outside the State Auto fold. He serves as president, CEO, and chairman of the board of both the mutual company and its downstream stock company, State Auto Financial. Restrepo had spent much of his career at large stock companies, namely Aetna and Travelers where “I focused on personal and small commercial lines—businesses that depended on independent agents,” Bob says. “When I left Travelers, I went to Hanover. I like the regional company model. They have a unique focus on the market. When the boards offered me the opportunity at State Auto, I knew it was a dream come true. “At their best, regional companies focus on commercial accounts that are beneath the radar of larger companies, as well as personal lines. These accounts represent a stable and predictable business that can be very profitable. When I looked at State Auto,” Bob continues, “I saw that it exemplified everything that was positive about a regional company. In addition, I saw some real opportunities to promote organic growth through enhanced pricing precision and new product development that relied on State Auto’s core strength—sound underwriting. This is a company that has boasted an underwriting profit in all but two of the last 15 years. And those two years showed an underwriting loss because of the merger with Meridian Mutual where we had to revalue some reserves. However, the core business was always producing combined ratios in the 90s or better.” The business mix at State Auto is about 60% personal lines and 40% commercial lines. “I would like to see a 50/50 mix,” Bob says, noting that the company had been trying to get to that ratio for about 40 years. “We acquired several small regional companies that had personal lines books and this accounted for the bulk of our growth.” But that is something that Bob wants to change by achieving a better balance between organic growth and growth through M&A. “You have to recognize that we’re in a relatively flat business environment so growth involves taking business from someone else,” Bob points out. “In order to accomplish that, we’re ramping up our investment in technology and new products. “We’ve invested in a new personal auto product, CustomFit, that uses predictive modeling and will adapt the same techniques for other lines. The result is faster, more accurate pricing. We’re now extending that to include our BOP products and other commercial lines products where appropriate.” While it has been less than a year since Bob Restrepo took office, agents already are enthusiastic about the new directions he is proposing. “What’s happening at State Auto is all good,” says Bob Carmack, president and CEO of Carmack Insurance Group, Frederick, Maryland. “Our agency has represented State Auto for more than 50 years and always had a good relationship. Bob (Restrepo) is bringing fresh new ideas that will take the company to the next level. I’m really pleased with the efforts in the automation area. State Auto has always been a company that was easy to work with, but the new technology makes it even better. In addition to representing the company as an agent, I’m also a stockholder and I’m excited for that reason as well.” Carmack Insurance has premium volume of a little over $10 million, with a business mix of about 60% commercial lines and 40% personal lines. “There’s a renewed spirit, new products, more competitive rates, enhanced automation tools, and broadened underwriting authority for the field representatives,” enthuses Craig Moon, president, Moon & Adrion Insurance Agency, Middletown, Ohio. “We’ve represented State Auto for 85 years and we’re actually experiencing the excitement and enthusiasm of taking on a new carrier without any of the downside. Bob [Restrepo] is making a great company better. I have a renewed sense of excitement. “Bob has met personally with the agents and with the people in the company. He’s spent a great deal of time finding out what they want and need,” Craig continues. “He takes action quickly where needed, delegates when appropriate, and has chosen to empower people so that they’re on board with the changes and also are working to make the company better. When I talk to him, I feel like I’m talking to a co-worker or buddy. He’s perfect for this job. The board hit a home run with this appointment. And the neat thing is that everybody feels this way, not just agents, but also the field reps, the people inside. I’ve even talked to people who don’t represent State Auto and they’ve heard good things.” Moon & Adrion is a State Auto Inner Circle agency, with a business mix of about 40% commercial lines and 60% personal lines. “What I really like about State Auto is that they understand who their customer is—the agent,” says Patrick O’Neil, president, O’Neill Insurance Agency, Wadsworth, Ohio. “We’ve represented them since 1924 and I’ve been an owner since 1991. State Auto has always been an excellent market for both commercial and personal lines, but I can tell you that I’m really fired up. Bob is the right guy at the right time. I’m honestly more excited to represent them. “We’ve been an Inner Circle agent with them for eight years and they’ve always treated us very well,” Patrick continues. “But I think Bob Restrepo will really ramp things up with new products and enhanced underwriting. He listens to agents and really treats us like a customer and that filters down to everyone at the company. You can talk to anyone at State Auto, regardless of his or her position, and they will listen, treat you with respect and come up with an answer if you have a problem. It is a very good relationship. This is exciting for us as agents.” O’Neill Insurance Agency’s business mix is about 67% commercial lines, 23% personal lines and 10% financial services. Bob Restrepo says State Auto is focusing on the Four P’s to achieve growth, while continuing to make an underwriting profit: 1. Predictive modeling “Predictive modeling provides us with an opportunity to really enhance our underwriting capability and broaden our underwriting appetite,” he points out. “We have already been able to adjust pricing in certain lines or geographic areas to more accurately reflect the underlying risk. “Product development and expansion is imperative if we want to not only write all of a particular client’s property/casualty business, but also for us to expand and write new business. We are currently looking at specialty lines that fit with our small business appetite and our underwriting expertise. “Portal is a key part of our expansion. We have already developed Web-based engines for personal lines and are working on real-time rating and quoting for commercial lines. Right now, 93% of our personal lines business is submitted via the Web. “While ‘people’ is the fourth P, it probably should be first, second and third as well,” Bob maintains. “Our people have always been our strength, and our goal is to empower them even further. We have 36 really strong territorial teams in 27 states. Those people call on our agents on a regular basis. They are the reason for our success, and my job is to make certain they are empowered, equipped, and properly trained and incented to continue to make State Auto the best company for our agents and their customers.” Bob continues, “State Auto has a well-developed enterprise risk management (ERM) program internally. We have the right risk and rate balance, conservative investment management, sophisticated business continuity and disaster recovery plans, and no layoffs legacy. It shows, and demonstrates our commitment to risk management. We’ve been doing this for a long time and intend to export some of this expertise to clients where appropriate.” Over the next few years, he continues, “we intend to focus on capital management to find optimal ways to deploy our capital. We have been so successful from an ERM and underwriting perspective, that we have been able to develop and retain a lot of capital. Certainly, we will look at investing in new businesses and attractive mergers or acquisitions. “An important part of our strategy will be to acquire talent. We need strong project managers and actuaries to develop and deploy new products, creative sales managers, and people with underwriting expertise who can help us move into new specialty areas. My job is to make certain we have a culture that will attract people who want a challenge. We have a very family-type culture with Midwestern values. It’s a great place to work.” He concludes, “We also recognize that we need to be ready to help our agents succeed. We have a Pacesetters program where we help agents develop sales management expertise. But what is unique is our follow-through. The program doesn’t stop once the training is over. We continue to provide sales management supervision for 12 months after the program is completed, including weekly sales management calls. Our agents have told us that it is one of the best programs we offer them.” State Auto, as can be seen by the comments of agencies that have represented the company for years, has been one of the mainstays of the independent agency system in the states in which it operates. The appointment of Bob Restrepo has served to enhance this position. It should prove interesting to watch how this develops in the future. * |
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