A definitive purchase agreement has been signed for the acquisition of Columbus, Ohio-based Century Surety Group (CSG) for $31 million, to a consortium of financial entities led by CSG management. The transaction is subject to regulatory approval.
CSG is a wholly owned subsidiary of Century Business Services Inc., a company publicly traded on the NASDAQ under the symbol “CBIZ.” The consortium of new investors includes Avalon National Corp., along with Stonehenge Capital Partners Inc., Colonial Banc Corp., First Mutual of Richmond and Ohio Valley Banc Corp. These companies will take over CBIZ’s risk-bearing insurance division, made up of Century Surety Company and Evergreen National Indemnity.
“They obviously have the financial stability which will definitely help us in our quest for growth,” said Randy Williams, western regional vice president for CSG. “[The consortium] consists of our former owners before they sold to CBIZ, so we’re really the same company, it’s just that now we have some new blood.”
CSG is currently comprised of three companies: Century Surety Company, Evergreen National Indemnity Company and Continental Heritage Insurance Company.
Change is good
Without a doubt, this acquisition is going to change CSG’s operations, Williams said. “We now will have the ability to react much faster to inquiries on our programs or book roles or risk-purchasing groups…because we will no longer have to approach our holding company,” he explained. “And there was never anything wrong with CBIZ, other than the fact that they had little experience in the risk-taking business…so we weren’t able to move as quickly as we would have liked to.”
As for how the deal will affect agents and brokers, Williams believes that they can expect a closer relationship. “It’s going to
be easier, because we are working on things and developing methods to make it easier to work with us-to make it easier to work together,” he said. “We are committed to the wholesale general agents and brokers, and we’re going to continue to support our agency force that we currently have.”
Roswell P. Ellis, who plans to reassume the title of CEO of CSG following regulatory approval of the sale, sent out a memo to all CSG agents affirming this commitment. Ellis stated that after reviewing this proposed affiliation carefully, it was determined that it would have no conflicts with the Group’s existing general agency force. “We will be developing a business plan that will enable the banks to become better associated with the insurance process and, hopefully, develop additional avenues of insurance cooperation,” he stated in the memo.
The feeling is that CSG’s current general agency force has supported the company in the past, which is why Williams said he expects the trend to continue in the same direction.
“We’re still pretty much the same Century as we have been in the past, but we have new energy, so I really think it’s a new company with much of the same philosophy in regards to underwriting approach,” Williams said. “I think that with the ever-changing market conditions, business relationships will grow even stronger with the people that we’re currently doing business with.”
Accentuate the positive
In 1996, CSG received its first “A-” rating from A.M. Best based on “consistently profitable operations, disciplined underwriting approach, strong growth in surplus and good geographic spread of risk.” Best recently affirmed the Group’s “A-” rating.
Profitable growth of CSG has been achieved through development of E&S business as well as admitted P&C products. That growth was further enhanced by a variety of acquisitions, including Continental Heritage Insurance Company (1992); Evergreen National Indemnity Company (1993); and American Sentinel Insurance Company (1994) which eventually merged into Evergreen National.
In 1997, CSG acquired the St. James Agency of Houston, Tex., to strengthen its surety operations in the Texas region. Today, the Group operates in 47 states and Washington, D.C.
Williams has a good feeling about this sale, as he personally knows most of the new people that will soon become part of the company. “They’re intelligent, they’re aggressive, they’re energetic and they have the desire as we do to offer good insurance products at a fair price,” he said. “And if you throw in our current management, we’re ready, willing and able to reach our goals as well as the goals of our agents.”
One thing for sure is that CSG’s Western region is very excited about the sale. “Morale has increased and that helps with service,” Williams said. “CSG has had an excellent reputation and we’re going to continue to be responsive to our agents to maintain that.”
Eliminate the negative
In an effort to refocus on its core lines of business, CSG announced a departure from the transportation lines last month. “We withdrew from primary commercial auto and dealers mainly,” Williams said. “We had some problems with losses and…the market conditions were less than ideal.
“Pricing was not adequate over the past few years to really allow us to make an underwriting profit, so we chose to avoid severe problems by withdrawing from those lines before we got into irreparable damage.”
ýMost of the Group’s general agency force-particularly in the Western regionÐdid not write a lot of transportation business, and therefore, Williams feels that they shouldn’t see any adverse effects from the decision. “Unfortunately, it’s a line of business that’s very tough and market conditions just wouldn’t support it,” he said. “It was a good business decision on our part.”
Topics Agencies New Markets
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