Marketing Agency of the Month

Good corporate citizens

Rose & Kiernan's reputation sets the stage for success

By Dennis H. Pillsbury

Rose & Kiernan, Inc., East Greenbush, New York, has been a fixture in the Albany area for 140 years, tracing its roots back to 1869 when Rufus Rose established his own agency. His son, William, took the reins when Rufus retired. In 1901, Peter D. Kiernan entered the agency. In 1914, it was incorporated as Rose & Kiernan, Inc., and was managed for the next 60 years by Peter and his son, Peter D. Kiernan Jr.

When Peter Jr. left the agency in 1974 to assume the presidency of an Albany-based bank holding company, he had to divest himself of the interest in the business. It was purchased by the employees on May 8, 1974, and has been completely owned and operated by its employees since that time. The Rose & Kiernan, Inc., ESOP was established in 1987. Employees who have been with the agency for two years or more participate in ownership by receiving 15% of their salary in agency stock as an annual benefit. The ESOP currently owns 54% of the agency’s stock.

“This has created a sense of empowerment and has proven to be a great employee retention and recruitment tool,” notes John Murray, president and chief executive officer of the agency. “Every employee realizes that his or her efforts will have an impact on the agency’s bottom line. And we reinforce that by being completely open with our financials.”

Apparently, if results are any indicator, it is working. When John joined the agency from Marsh & McLennan in 1994, revenues totalled $6 million and the agency’s stock stood at $51.02 a share. It was strictly a property/casualty agency with a niche in construction. Today, the agency has $39 million in revenue, with 40% coming from employee benefits, and the stock is at $249 a share. There is no mandatory redemption and the stock pays a dividend of around 2% to 2.5%.

The agency, which has nine offices in New York State and one in Danbury, Connecticut, employs 195 people. About half of the growth has come from acquisitions, with the other half coming from organic growth.

Integrity fuels both kinds of growth

“The hallmark of our agency is our commitment to high ethical standards and professionalism,” John points out. “And that applies to our customers and prospects, to our employee/partners, and to our competitors.”

Like any good agency, Rose & Kiernan has distinguished itself in the community by providing excellent service to clients and by being a good corporate citizen that provides leadership within the charitable community. “Our people serve on the boards of 70 not-for-profit organizations and provide service to more than 200 charities,” John points out. “We have always been committed to serving and funding organizations that make the community better,” he continues. The agency has an endowed foundation that makes regular contributions to such organizations.

“We are seen in the community as good corporate citizens and this helps us when we get in front of prospects,” he adds. “Most of the people in our marketing area have heard of us and know our reputation for integrity. That certainly gives us a leg up when we are competing for business.

“But that is not our only advantage,” John continues. “We have spent a great deal of time looking at our current customers to see what we do well and where we need improvement. We are very focused on that. When we meet a potential client, we bring that knowledge to bear by pointing out what we offer that they don’t get. We are very “rifle–oriented,” drawing a bead on which clients and prospects would benefit most from the value-added that we offer.

“It also helps that many of our new customers come to us from our current customers,” John observes. “We offer seminars on such topics as wellness and health care reform. We invite our existing customers and encourage them to bring other people to the seminars. They are strictly informational in content, but quite often wind up leading to an opportunity to meet a warm prospect.

“Our entire approach is positive. We let prospects know what we can and will do for them. We never denigrate the competition but, instead, focus on what we can bring to the table,” John points out. “We have a very strong back office that provides loss control and claims support, as well as industry expertise.

“We also have a wellness director on site who handles the wellness program for our employees as well as providing service to clients,” he explains. “That has become a critical component for many of our employee benefits clients. Most of our larger clients are self-insured or have a large deductible plan. Wellness plays a key part in keeping their health care costs under control. And we really have the results to prove that since Rose & Kiernan has served as the test site for our wellness program. We’re self-insured and we have outperformed the marketplace.”

John notes that wellness has also played a key role in the workers compensation arena. “Most sophisticated companies have allocated workers comp responsibility to the human resource division so that health care management integration can take place. The result is a reduction in both health care claims and workers comp claims.

“We also are completely transparent with our clients. We tell them exactly what we will get paid. Many of them are quite surprised at the amount that we actually get. They thought it would be more and are impressed at the service we offer for the dollars received. We also reveal that we may receive a contingent commission from the insurance company if the results are strong. Our clients have no problem with that. They see it as proper remuneration for services provided to the insurance company. We serve as the front line underwriter for many of the companies we represent, and profit sharing in the form of contingent commissions is viewed as appropriate. They also only amount to a few basis points when compared to our total commission revenues.”

Acquisition opportunities

“Our focus on integrity also has been a key part of our effort to grow through acquisition. When we approach owners of agencies that may be looking to sell, they know about our way of doing business and often are disposed to become part of our team.” John says. “We look for agencies that have a philosophy of service that is similar to ours. Our best acquisition,” he continues in a rueful tone, “was our worst acquisition. The agency didn’t share our vision of service and it didn’t work out very well. But we learned from that and always look for people who share our vision both about customer service and a positive employee experience. Since that one bad acquisition, we have had many successful acquisitions where we didn’t have the distraction of trying to integrate employees who just didn’t want to be part of our system.”

When Rose & Kiernan approaches a potential acquisition target, “we look not just for a philosophical fit, but also want to bring people on board who intend to continue their careers for at least five years,” John points out. “We ask them what their perpetuation plan is and then point out the advantages that make a merger a win-win for all concerned:

• “They and their employees will have the opportunity to become owners.

• “There will be more opportunities for their customers.

• “There will be increased access to insurance company markets.

• “We have an ongoing perpetuation plan that assures that we will remain independent.

• “We offer nice career paths for all of our people.”

While Rose & Kiernan uses acquisitions to bring talented people into the fold, it also is involved in attracting talented young people into the profession. “I’m bullish on the insurance industry,” John maintains, adding, “It offers great opportunities for young people. We’re greying a little bit and need to look to the future. We helped found a community college program here that focuses on insurance. It has helped us be successful in finding good young people who are predisposed to a career in insurance.”

Global expertise

“At the same time, we are always looking for talented people who will allow us to expand or enhance our services to our clients. We have started to gain recognition as an agency that can solve difficult problems for clients. That hasn’t happened by accident. We have 15 ex-Marsh people on staff with experience in the global insurance marketplace. This has given us strong relationships in London and Bermuda so we can provide risk transfer solutions to the large, sophisticated client as well as the small and medium-sized companies.

“We are looking to grow in the mid-Atlantic and southern parts of the United States and have built capabilities around that goal,” John continues. “We can and do write coastal properties. We have a strong and growing global retail clientele. Our surety expertise is second to none.

“And this expertise is available to everyone in the agency, no matter where they’re located. Each account is the responsibility of one sales professional who has a team of five service people backing him or her up. And behind that group is instant access to experts in every insurance discipline. All of our offices are linked with voice, data and video capabilities. For example, one of our sales professionals in an office five hours away can have our construction expert involved in a client meeting via those capabilities. It saves driving and is a very efficient and effective way of doing business. And, because it is highly interactive, it has really created a cohesive atmosphere.

“When I call on a property/casualty client, for example, I know that I have 40 employee benefits professionals I can reach out to if there is an opportunity to cross-sell or simply to answer a client question. And, by the way, I do a lot of calling on clients. We’re a very flat organization. I am remunerated for my sales efforts, not because of my title. And that’s true of all our officers.”

In addition to its involvement in the local community, Rose & Kiernan also is active in the broader insurance community. John chairs the Big “I” Large Agent/Broker Panel and just came off the InVEST board. Executive Vice President Charlie Daniels is a past chair of the CIAB. And several other individuals serve on statewide Big “I” committees and on a plethora of carrier councils.

“That helps keep us relevant to the insurance industry,” John points out. “It also keeps us close to carrier senior management. We see how other agencies are managed and make certain that we continue to follow best practices.”

Rose & Kiernan has established a reputation for integrity that has allowed it to grow and prosper. We are pleased to recognize the agency as the Rough Notes Marketing Agency of the Month.