Cover Story – In good company

Posted on Jun 3, 2013 :: Cover Story
Sean P. Johnson
Posted by , Insight on Business Staff Writer

John Bykowski’s emphasis on relationship-building has been one of the key factors in bringing Secura back from a negative outlook rating in the mid-1990s. In 2012, Secura saw its total assets grow to $850 million and had a return on equity of 12.2 percent.

The list of CEOs who would dress up as the cop from the Village People to inspire employees is most likely a short one. But at the top you will find John Bykowski, chief executive officer of Secura Insurance, who seems to relish his role in the over-the-top performances he has participated in as part of his company’s annual United Way giving campaign kick-off. “The year we did the Village People, we had the Appleton Police Department bring me onto the property with all the lights and sirens going,” Bykowski recalls, while showing off photos from other kickoff campaigns where he has played roles in spoofs as diverse as the Blues Brothers and Jersey Boys. 

“We like to make sure we are serving our community,” he says. “And we like to have fun doing it.”

Indeed, the performances, as well as the annual campaigns, have become well-known hallmarks of the company culture at Secura Insurance, which regularly wins accolades for its contributions to the United Way both in dollars and employee involvement.

There is, of course, more to it than unique United Way campaigns.

Bykowski’s style and inspiration extend well beyond those special events, and his emphasis on commitment, service and relationship building can be found in every facet of the company’s operation. Indeed, it is the leadership culture he created that is often given credit for saving the company in the late 1990s and leading it through an extended period of stability and growth.

You sense that culture as soon as you walk into the main lobby.

It starts at the reception desk. Customer satisfaction specialists Mary Ver Voort and Brenda Rozmiarek don’t just greet you and ask you to sign in. Instead, they engage you in a conversation – perhaps interrupted by phone calls, but quickly resumed – about what’s going on in your day and the business that brings you to Secura’s office complex on Memorial Drive.

No doubt they will ask you to try one of the cookies, too. It’s less greeting and more engagement, all part of Bykowski’s emphasis on relationship building.

It’s one of the first things the independent agents representing the company mention when they talk about working with Secura.

“Insurance is a relationship business and you have to be able to trust the folks you work with,” says Mark Behrens, an agent with Johnson Insurance Services LLC of Racine. “John has created a great culture there. He has put together a great team that believes in the culture of relationships.”

Behrens, who says he sees Bykowski four to five times a year, says the responsiveness of the company’s employees is second to none, even when it’s an answer you don’t want to hear. If they can’t write a policy, they report that immediately and don’t string you along with “maybes,” he says.

“The two best answers you can get in this business are yes and no,” Behrens says. “You want to know right away and they do that.”

Bykowski is quick to credit the dedication of employees for those accolades.

“We want to be seen as the company that is easy to do business with for all of our services,” Bykowski says. “All of our employees get that. They all know they are important to building the relationship.”

 

Rebound from the recession

It’s an approach that works. In 2012, the company grew its written premiums to $417 million, an increase of 7.9 percent. The company saw its total assets grow to $850 million and saw a return on equity of 12.2 percent for the year.

Secura also added $32 million to its policyholder surplus, growing that to a total of $273 million, which represents a 160 percent increase during the last 10-year market cycle.

“This was one of those special years where we exceeded all of our goals with the exception of new business sales,” Bykowski says. “Our top line growth was excellent. We kept our current customers happy and we make more money on renewals than new policies.”

Indeed, 2012 reflects a nice rebound from 2011 for Secura, when claims from multiple weather events took a toll on the company’s financial statements. It also caps a period of recovery and growth from the Great Recession of 2008. Since 2009, the company has reported steady growth in written premiums, policyholder surplus and total assets.

While the weather can always wreak havoc on the best of plans, there is little reason to doubt those trends will not continue into 2013.

“We always have to qualify the outlook because we can’t control the weather,” Bykowski says. “But, we expect the next couple of years to be good.”

That could not always be said about Secura.

In the mid-1990s, the company’s surplus was less than $96 million and Secura was struggling financially. AM Best, which rates insurance company performance, had given the company an A- rating with a negative outlook.

At that time, Secura had six offices scattered across the Midwest and was working with more than 900 independent agencies, yet did not seem to be the company many of them favored. In addition, Secura was paying out more in claims and expenses than it was collecting in premiums. Certainly, that can happen on occasion when there are catastrophic events, or a series of catastrophic events resulting in higher-than-normal claims.

Secura was experiencing a negative loss ratio even in years without catastrophic events and claims. In short, the company was losing money and needed a new direction.

 

Reshaping the business model

In 1996, the board of directors decided to make a change to reinvigorate the company. At the time, Bykowski was working for West Bend Mutual of West Bend as its senior vice president for marketing. In his position there, he was working with independent agents around the country – and it was one of those agents who recommended Bykowski to Secura as a candidate for the CEO position.

So why leave a successful company for one that was struggling? For Bykowski, the answer was simple.

“The opportunity to be a CEO in your home state does not come around too often,” he says. “Secura was a similar company. It needed some serious changes in its business operation and a change in culture.”

Joined by current Senior Vice President David Gross the next year, the two set about reshaping the business model and company culture into the company Secura is today.

On the business side, Secura jettisoned its life insurance company, sold its broker dealership and got out from under its real estate investments. The regional offices were closed and operations were consolidated in Appleton to improve efficiency.

“One of the most difficult decisions you can make is to put someone out of work,” Bykowski says.

Secura also reduced the number of independent agents it worked with, cutting the number nearly in half.

The second part of the turnaround strategy focused on Secura’s own employees and improving the work culture within the company. At the time restructuring began, the annual turnover rate for employees was more than 35 percent. Now, departures are measured in single digits and the hiring process is very deliberate as the company wants to make sure new additions will fit in.

Indeed, the average employee at Secura has been with the company for 12 years or more, and many have advanced degrees. That stability and expertise has become a cornerstone of building relationships with independent agents.

The changes worked. As Secura entered the new millennium, its loss ratio improved and it began to see annual improvements in written premiums and a buildup of its reserves. A.M. Best consistently rates the company A with an excellent outlook for its financial strength and ability to meet its financial obligations to policyholders.

“The culture was here, it just needed to be allowed to surface,” Bykowski says. “The people here, their work is important to them.”

 

Customer service: Not a cliché

Joe Dever can attest to just how committed Secura’s employees are.

Dever works with Insuramax, Inc., the first independent agency to sign with Secura when the company expanded into Kentucky in 1997. Dever has seen first-hand how the company has changed and has nothing but praise for its commitment to building relationships with agents.

“They are the easiest company to work with by far,” says Dever. “At every level, from risk management to marketing to underwriting, they take their role seriously and they take care of our clients.”

Dever is quick to credit Bykowski for that approach. He says the company reflects Bykowski’s values and commitment to customer service. To Bykowski, customer service is more than cliché promises.

“He makes it very easy to call him,” Dever says. “We’ve had issues over the years, and when he says it will be taken care of, it gets taken care of. The company permeates with his personality. They make you believe in them.”

That’s not just Dever’s personal opinion. Whenever his agency does customer satisfaction surveys, Secura is consistently ranked at the top, regardless of the product line. Other companies may score high in one product, but low with others, he says.

Achieving those high marks from agents and customers is critical. In an age of online and direct sales, Secura still relies on a network of independent agents to sell its policies to customers in their geographic areas. Those independent agencies are always free to recommend another company.

In fact, Bykowski believes the independent agent is a critical component in the sales process. While many companies have come to rely on Internet and direct sales, the agent acts as a counselor to the client, recommending the best policy, not just the cheapest, Bykowski says.

In nearly 30 years of working as an independent agent, Tom Terry has written policies on behalf of many companies for his customers and represents more than 10 in his work with Keller-Lowry Insurance Inc., in Denver. His agency began working with Secura six years ago as the company expanded west.

Not convinced the agency needed to represent another company, it only took a few transactions to realize there was something unique about Secura, Terry says.

“In six years, I can only recall one phone call where we could not get something resolved immediately,” Terry says. “Whenever our folks visit Appleton, they come back just raving about how dedicated and personable everyone at Secura is. That’s just a reflection of John.”

 

New markets, new products

Not just content to fix the business operations and reshape the company culture, Bykowski and his management team have been steadily expanding Secura’s national footprint. The company now serves agencies in 13 states. While largely concentrated in the Midwest, the company has been steadily moving west and southwest.

The company also has launched some new products. Three years ago, Secura launched its Secura Specialty line, a unique product that provides protections to special events such as sports tournament or hole-in-one contests. This new line writes about $15 million to $20 million in premiums each year and has a potential to be very profitable for Secura.

When evaluating potential new markets, it’s quite likely the western and southwestern path of expansion will continue, Bykowski says. Those states tend to grade out best when considering the regulatory environment, competition, agency quality and need for Secura’s insurance products.

“North Dakota, Colorado and Arizona made great sense, and we have our eye on states like Utah, South Dakota and Montana,” he says. “I don’t think we will be looking at the Gulf Coast or East Coast anytime soon.”

Of course, that could change with changes in the regulatory environment or other factors. Since Secura is a mutual company rather than a stock company, Bykowski and his management team can take a much longer view of what they need to do for success.

“In a stock company, the CEO has to worry about the price of the stock and the results at the end of the quarter,” Bykowski says. “I don’t have that kind of pressure. For every decision we make, we have to consider the agents, the policyholders, the employees and association.

“We can think longer term,” he says. “We want to grow, we can grow, but when it’s not prudent, we can sit back and wait until it is.”

About Secura Insurance

Secura Insurance is a mutual insurance company with headquarters in Appleton. Founded in 1900, the company began by insuring area farmers. Now, it operates in 13 states and offers insurance lines for business, home, automobile, non-profits and farm. In 2012, Secura:
» Grew direct written premiums to $417 million, an increase of 7.9 percent
» Built its assets to $850 million
» Generated a combined ratio of 97.9 percent, beating industry estimates by 8 percent
» Produced a return on equity of 12.2 percent
» Increased investment income nearly 4 percent
» Rated A Excellent by A.M. Best for the ninth consecutive year
» Ranked fourth nationally by independent agents for ease of doing business.