Bolton & Company Grew with the Times

In a new series in Insurance Journal, we’ll profile agencies that have made a name for themselves in the industry with a special niche. In our first interview, we talk with California’s Bolton & Company. Run by brothers Jim and Bill the company has grown from $280,000 in premium when the brothers joined, to some $200 million in premium. The company was purchased in the late 1930s by the brother’s father; Dorance. Jim came into the business in 1964, while Bill joined on in 1967. Both brothers came to work for their father at $350 a month, less than their monthly rent. This month, they’ll step aside as owners of the company that employs some 150 people but will stay on as directors and keep a small line of business. Do you know of an agency that has a special niche in the marketplace? E-mail dthomas@insurancejournal.com.

Dave Thomas: Would either of you growing up have said you wanted to go into the insurance business?

Bill Bolton: We were both raised with insurance people. My uncle was an insurance attorney who represented most of the insurance influences in the state. All we heard was insurance. I was kind of bound and determined that I was not going to go into insurance. At Cal (Univ. of Calif. at Berkley) I had a choice between advanced calculus or insurance… that wasn’t a very tough decision. I took an insurance course and really fell in love with it.

Jim Bolton: I went to work for Pacific Fire Rating Bureau (now the ISO) and really came into the agency sooner than I thought. My dad had gotten sick and needed some help in the agency. I came in two years before I thought I would. It was kind of a back door thing. I always wanted to be a stockbroker. I went into the agency business to help my dad out and that’s the only job I’ve ever had. (The two took over from their father in the early 1970s. The deal they made with their dad was to guarantee him an income for life. Today he’s still alive and will turn 94. The brothers’ accountant reportedly told them, ‘that was probably the worst business deal I had ever seen in my history and nobody cares.’]

Dave Thomas: How have you grown the agency over the years?

Jim Bolton: Bill and I grew it by a lot of hard work. We would solicit new accounts and service accounts by day, and write up applications and do paper at night. We wrote quite a bit of new business during those times. With a certain amount of luck, we hired very well and as they achieved their goals, we let them own some of the company.

Bill Bolton: One thing we believed in was growing the agency, and to do so we couldn’t take a lot of money out of the agency. I would always see my contemporaries running around in Mercedes, and Jim and I were running around in Ford Taurus’. We really felt it was important to reinvest the money back into the business.

Jim Bolton: I don’t think we ever took a bonus in the mid-80s. We never really paid ourselves a management fee for all the management we did. We just plowed it back into new producers.

Dave Thomas: Your growth over the years has been mostly internal. Why do you favor that over growth by acquisition?

Bill Bolton: We believe that internal growth as opposed to acquisition is better in the long run. But growth internally is difficult in that it requires you to be rather precise in your selection of people. It is more of a gamble. Our corporate culture always has been to hire right, tell them what you want done and basically how it should be done…then step back and get out of their way. Good employees work better and get better results under this system. In an acquisition you have the clashing of two different cultures, people who do not fit into your methods, corporate problems that were brewing under the surface prior to sale and etc. It can often be a bad marriage, or a rocky marriage. And this takes time to cure..time out of production. A bad merger can stop a firm dead in the water due to bickering, backbiting and squabbling. We don’t have any of that.

Jim: We have used a very elaborate and extensive hiring system. In the final analysis, Bill and I can’t evaluate a person’s real character and motivation. So we have all key hires evaluated by an Industrial Psychologist. Hiring the wrong producer is a $500,000 mistake. Do the math. We can’t afford that mistake. And, yes we have had our share of mistakes, but well less than the average.

Dave Thomas: Were some of the challenges the industry now faces in 2003 there a couple of decades ago?

Bill Bolton: What goes around comes around. The problems they’re seeing today aren’t any different than what we saw in the past. I can remember in the 70s when workers’ comp was so tight nothing could be placed. I can remember in the 80s when you couldn’t buy products liability. I think in those days the market was a little tighter because the capacity was less. Other than what I stated, this current market is no different than previous hard markets.

Dave Thomas: What have been the greatest challenges over the decades for agents and how have you stayed successful?

Bill Bolton: The challenges have been the reduction in commission and the restriction of markets. When I came into the agency the first statement I saw, the average agency commission was almost 30 percent. Today you’re talking about 11 percent. The other agencies that I’ve seen sold have never really had a perpetuation plan, had solid goals or a business plan, much less. They’ve never thought about what to do when it is time to turn out the lights. The best thing for us was to be invited into Assurex International [now Assurex Global] that is a partnership of the 70 largest independently owned agencies in the U.S. and Canada. We went to school on those other agencies because we were not one of the larger ones, but we kept growing. Every meeting we would come back with some, what I call ‘$10,000’ ideas. We’d just massage it a little bit and make it fit to what we’d want it to do, put it into play, and it seemed to work. We weren’t afraid to listen and be connected with other agencies. We were also very involved with the WAIB (Western Association of Insurance Brokers, now IBA West). We just kept our eyes and ears open at an agent function anywhere and just learned. As a result we had markets …plenty of them. And we had yearly business plans…and a perpetuation plan…and goals and objectives that were serious.

Jim Bolton: Networking has been very important to us. We met a lot of people that we’ve acquired through going to functions. It was a case of they getting to know us and not wanting to sell to just any agents, that they wanted their clients to be taken care of the same way they were taking care of their clients. Our agency has been real progressive on Internet and automation. We’ve emphasized education and encouraged and paid for our employees to obtain critical designations like C.I.C. and A.R.M. In house we offer twice the number of formal education hours than is required by the state for licensing. We feel the more education, the less errors are made, the faster our work product is complete and the better our all-around service.

Dave Thomas: What are the challenges for someone starting an agency today and what do you see for the P/C industry over the next year?

Bill Bolton: Today is probably tougher than ever for a young agent to hang a shingle out and do it. The challenges they have are markets and producing business.

Jim Bolton: Most insurance companies won’t give a brand new agency an appointment. You could get some within surplus lines brokers, but to get a Hartford, Travelers or Chubb would almost be impossible.

Bill Bolton: I think the hard market will continue because of the financial weakness of carriers throughout the world.

Jim Bolton: Companies will continue to provide less and less service especially on the workers’ comp side. The brokers will have to step up and provide that to their clients. That’s what puts agencies like ourselves at an advantage by having a loss control department, human resource consulting, by having a claims department. We can go out and help our clients like the old workers’ comp and property casualty companies use to give them.

Dave Thomas: What happens now when you guys retire?

Bill Bolton: Jim and I hired several producers that showed promising management skills. Two in particular showed superior skills in addition to being top producers. So we let Steven Brockmeyer and Ron Wanglin have an opportunity to manage and everything they did exceeded our expectations. We had…and have a great deal of confidence in what they can do going forward. So, for the past 18 months, they have been running the company with their team. And we have stayed in the background and observed. Today, we are confident they are able to take this agency to a position far beyond where we are today. Jim and I are very proud of what they have accomplished.

Jim Bolton: We had observed that some of our young producers not only provided us with excellent new and fresh ideas, but had strong leadership skills. So, we made a deal with them that if you get the company to a certain position and value in five years, we will sell you a major percentage of stock. During that period we recognized their strong leadership and management ability and so we decided to sell them the entire company. Steve and Ron along with their team of 12 others achieved the goals set…and actually exceeded them. So, they will now own the company. Bill and I will semi-retire in that we will continue to be directors for several years, and will continue to handle a few of our long-term accounts…just like we did when we started. Watching this company grow will be exciting, and even more exciting from the inside. I predict this company will double its size in five years. Where this company has gone…and where it is going is almost beyond our father’s comprehension. But for sure he is very proud. And, looking back I am also proud of the fact that we have been able to hire well, and establish a company culture that emphasizes creativity and individuality. People like to work here because we let them work without interference. Our turnover rate is almost zero. And that number reflects the quality of our culture and the quality of our people.

Topics Agencies Workers' Compensation Training Development