Arrowhead General Agency ‘Right-Sizes’

San Diego-based Arrowhead General Insurance Agency Inc. laid off at least 10 percent of its employee base, according to Chairman, CEO and principal shareholder Patrick Kilkenny.

“We had a real significant run over the last two years, and that kind of growth is not sustainable without some re-evaluating and streamlining,” Kilkenny told IJ. “We went from $230 million in premiums a few years ago to $400 million last year. The growth was almost unmanageable. So we purged some people, got rid of some programs—nobody likes this stuff, but we think it’s healthy.”

Founded in the early 1980s, Arrowhead has grown from a small general insurance agency with a premium value of $2 million to one of the nation’s largest privately held insurance general agencies. Its employee base has expanded accordingly. “We went from 180 employees when we made the INSpire deal [a 10-year outsourcing agreement with INSpire Insurance Solutions in November 1998 to manage its policy and claims services] to over 400 in two years—and those are all college grads and professional people,” Kilkenny said.

Kilkenny turned to his senior management team for help in making the restructuring decisions. That team consists of Kieran Sweeney, president of YouZoom Inc.; Frank Ruyak, president of Arrowhead Group of Companies; and Kevin McDonald, president of Arrowhead Claims Management.

“I asked the management team to take a hard look at where we’re going over the next 24 months and make sure that the direction we’re headed is the right one given the state of the economy. We’re privately owned…consolidation is prevalent and I don’t want to get swept up in it.”

Thom Mudrick, director of public relations, attributed the layoffs mainly to changes in the company’s business climate and a shift in the company’s growth. “In the past, Arrowhead was pretty much all personal lines auto. Now it’s about 50/50 commercial lines and personal lines. And with that change in our outlook and our investment in technology, there was a need for a one-time-only movement of some people.”

Mudrick said the company’s employee population had decreased from about 398 people at the end of March to slightly morethan 360.

“It’s a belt-tightening type of thing,” Mudrick said. “Four departments are typically hit in something like this: HR, PR, marketing and training…I think the majority of the employees were in marketing.”

Others within the company were reassigned, including Andy Barile, former president of Arrowhead’s commercial division. Dick Rohde, president and CEO of the ArrowSource division, will reportedly step into his role.

Cal Rees, head of Arrowhead’s program management division, also left the company, but is assuming a senior role in a joint ventureship, according to Mudrick.

“We’re trying to be proactive on this and responsive to both the major business we’re in and of course our customers; and we feel it’s good both for the shareholders and the employees to get properly staffed—kind of right-sized.”

Arrowhead is planning a change of location by 2004 to a brand new business park adjacent to the soon-to-be-constructed San Diego Padres downtown ballpark. “We’ve signed a lease and we’re taking 75,000 square feet—two floors,” Kilkenny said. “We’ll be the anchor tenant over there.”