A Winning Culture

September 1, 2008 by

Insurance Journal Top 100 Agency Profile

RANKING: No. 12
Headquarters: Denver, Colo. and Wichita, Kan.
Year Founded: 1973
Additional Locations: Topeka, Kan., Dallas, Texas, Kansas City, Kan.
2007 Total Property/Casualty Premium Volume: $600 million
Other than P/C Premium: $275 million
% Commercial: 98%
% Personal: 2%
2007 Revenues: $77.2 million
Mergers/Acquisitions: Feb. 4, 2008 – Pacific Wholesale Insurance Broker of Texas (PWIB of Texas)
Number of employees: 476
Number of insurance carriers represented: 75

Can one run a successful business and do so in a supportive corporate culture? One Denver-based company is providing proof that success does not have to come at the expense of the working environment. IMA Financial Group Inc. has garnered the Best Places to Work in two different office locations in 2007, which is an unusual feat in itself. But the feather in the cap of the company, which takes great pride in its efforts to give back to the community, is winning Colorado’s prestigious Ethics in Business Alliance award. The award recipient is nominated by someone in the community who is not affiliated with the company, and is then chosen by the MBA Values in Action class at the University of Denver’s Daniels College of Business.

To an outsider, IMA’s selection is a relative no-brainer. This is a company that has taken its community involvement seriously: The company has set up the IMA Foundation, which utilizes a designated piece of company profits as the building block for community service projects and for various nonprofits. A visit to the IMA Web site (www.imacorp.com) does not uncover the IMA Foundation. Rather, visitors can download the Denver Office of Strategic Partnerships’ Business Good Citizenship Kit.

The company’s stated purpose: “To protect assets and make a difference.” So far, so good.

Especially proud of the culture at IMA is its CEO Rob Cohen. He believes that how the company acts with its neighbors is a good barometer for customers to judge how it will act with their business relationships.

“The first half of that purpose statement is the business we’re in,” Cohen said. “The second half of that statement reflects the kind of company we want to be. We want to make a difference for our clients, the communities we live in, and for our associates. That’s the elevating purpose that drives our thought process.”

Cohen also believes the IMA Foundation speaks volumes about the company and its people. “That’s our little piece of what we do every day that’s going to outlive each and every one of us. It will continue to be doing good long after we’re gone. We couldn’t do what we do without being blessed by the communities we live and work in. The better they do, the better we do.”

The same could be said for the shareholders of IMA, who are all IMA employees, or associates. That, according to Cohen, makes the goals of everyone in the company the same, and that benefits both employees and clients alike.

Smart Business

That’s not to say profits don’t matter; on the contrary, growing revenue is indeed part of the master plan at IMA. It is, after all, a business. As such, the aggressive growth plan is to double the company’s revenue every five years. How the company will accomplish that goal is simple — hire the best and provide them with what they need in order to be successful.

IMA has just under 500 employees, which makes its position in Insurance Journal’s Top 100 Agencies all that much more impressive. Growing revenue from $66 million in 2006 to $77 million in 2007 with plans to top out at $88 million this year means that the company has a lot of value in those employees. “It may sound like a cliché, but we hire very talented people and we try to give them the resources and tools they need and we get out of their way and let them do what they’re good at,” says Cohen.

The hierarchy within IMA Financial Group is a relatively flat one. The company has different operating companies or divisions that have complete autonomy. Within the IMA Financial Group there are three subsidiary companies — Towerstone, a wholesale insurance brokerage operation, IMA Inc., the retail insurance brokerage operation, and True North, a registered investment advisory discretionary money manager. Within the True North subsidiary, there’s True North Securities, a limited broker dealer.

The majority of IMA business is on the retail insurance brokerage side. Under IMA Inc., there are three subsidiaries, as well: IMA of Colorado, IMA of Kansas, and IMA of Texas. Within those groups are two divisions — special risk division and employee benefits.

Finding One’s Niche

Among the reasons IMA has seen success are the structure and culture that exists in the company. Simply put, producers are allowed to produce business. They’re teamed with account executives who are very similar to producers — the only difference is they have technical knowledge and relationship skill sets, whereas producers might have more networking and marketing skills. By putting employees with complementary skills on the same team, Cohen says it allows both groups to be more efficient, spending more time in core competencies.

Here’s where the IMA strategy really takes hold; the company recognizes the strengths and weaknesses of its entire employee base. From there, a concerted effort is made to team up people with varying skill sets in order to accomplish stronger, more efficient achievements. Cohen describes it in this way: “When I analyzed the insurance business, specifically the insurance brokerage business, and even myself, I quickly realized most of us spend 80 percent of our time in our secondary skill set and 20 percent of the time in our primary skill set. We can show example after example of the top salesperson becoming the sales manager.” That, he says, is contradictory to how talent should be treated. “What we’ve tried to do at IMA is to allow everyone to think about their primary and secondary skill sets, and then flip the model. If we can get everyone to spend 80 percent of their time doing what they do best, how much further could we go as an organization?”

The model starts at the top, too. Cohen is paired with Chief Operating Officer Kurt Watson. “I’m strong in his secondary skill sets and he’s strong in mine. By pairing us, we’re more effective.” Then on down through the organization, the model is repeated. In Cohen’s opinion, that’s been the key to the company’s phenomenal success. “That fundamental structural move and recognition of that are the biggest things that have gotten us to where we are.”

IMA also looks quite differently at how it creates market niches and specialty areas. Applying a very similar model, IMA does the opposite of its competitors — instead of setting up industry practices around producers with specific industry knowledge, the company hires producers who have experience in the areas in which IMA wants to specialize. In fact, the company looks at specialties in a very calculated way. “For us to have a specialty market niche, it has to meet two qualifications — we must have the technical ability to handle the business and do it in a way that’s unique and different, and we have to be able to marry that with the production capabilities. If we only have one side, then we might call it a focus area, but we’re not going to call it a market niche or specialty area.”

Next is to bring in the talent. Cohen says he looks for people who are natural-born sellers. “One thing I’ve learned in this business — I don’t know how to teach someone how to sell. I might teach them how IMA looks at things and how we do it, but people either inherently come with that skill set or they don’t.”

Producers come from specific niche areas. The director of the company’s energy practice once served as president at an oil and gas company. The top producer in the construction side of the business — he was a construction consultant prior to IMA. “We bring those people over who have the market knowledge and put them in their niches.”

In It for the Long Haul

Perhaps IMA’s concentration on its employees and their talents is to account for the longevity of the employee base. It’s commonplace to find employees with more than 10 years with the company. Cohen himself has been with IMA for 22 years.

One reason people stay is the vested interest employees have in this employee-owned company. Another reason — competitive compensation. Still, Cohen sees it another way. “At the end of the day, it’s all the other reasons why people work somewhere. I’m biased, but I think we have a very unusual culture here. We often refer to it as the IMA family. We do a lot in community service and community giving. We’re very supportive of each other within the company. You spend a lot of your waking time at work. It ought not to be work. That doesn’t mean we don’t work hard and get things done, but it can be fun and you can enjoy the relationships you have with people, and it can be like a family.”

Old and New

For Cohen, this was a family business. His grandfather was part of the company at its inception. Three families started the business — the Yankey, Modrell and Cohen families, all separate agencies started in the 1930s, joined forces in 1973. In 1974, the partnership dissolved and IMA was formed.

From that time to now, the company developed to its current, employee-owned model. Cohen, the third generation, is the only member of the original families still in the business, but he sees it still as a family business — the difference is the family members are the employees.

When asked, Cohen is hard-pressed to pinpoint just one period that helped define the current company. More slow and steady seems to be the way things have occurred. “It was a series of small, strategic moves that slowly compounded. If you simply grow the company at 5 percent to 10 percent every year, one day you’re at $20 million in revenue and the next day you’re at $80 million in revenue. That’s what we’ve done. We’ve had our plan. We’ve stuck to it, and we’ve tried not to waver too far from the core basics that have gotten us to where we are. We have slowly grown and continued to build.”

Smart Acquisition

The company won’t be relying on mergers or acquisitions as a primary focus for its growth. They have plans for expansion into new areas, which may or may not come through strategic acquisitions, meaning acquisitions come typically as a result of a business being in alignment with IMA’s strategic direction. “For us, we’re not doing acquisitions to grow or to do anything different. We will only look at acquisitions if they’re aligned with our strategic direction. We already wanted to diversify ERA (Energy Risk Associates Inc.). This just helped us do it faster, better.”

That ERA business Cohen speaks of led to the acquisition of the Dallas operations, Pacific Wholesale Insurance Broker of Texas (PWIB of Texas), which was the basis for the company’s new entity, Towerstone Inc., a wholesale insurance broker and managing general agency. The difference between the old ERA business model and the new Towerstone model? More diversification. ERA was once concentrated on energy. Now, the Towerstone model covers a much broader range in the wholesale market.

Also, it has allowed IMA to double the size of net revenue in the wholesale business. The company now nets $7 million on a combined basis. Most recently, IMA opened offices in Kansas City and Dallas, and while he’s reluctant to share future expansion plans, Cohen says other areas are being considered. “That’s a big part of our strategic plan for growing the company.”

The company has also joined forces with Assurex and Intersure, both business partnership alliances that allow smaller to mid-sized agencies the ability to compete at large-scale levels. Cohen sees both organizations as key factors in IMA’s growth through networking and information sharing with other agency partners.

Market Influences

In this soft market, that may be a very wise decision. No one is immune, including IMA. “We’re no different than anyone else,” says Cohen. “The market is impacting us. You can’t have pricing going down and not have it impact your revenue.”

Even so, IMA has put in plae strategies expected to help alleviate some of the market inconsistencies. The company continues to write new business, and is negotiating with carriers on an account-by-account basis on each renewal to try to lessen the impact on revenue. IMA is also looking at contingent, incentive and supplemental payment structures for ways to enhance business from the producer side.

Perhaps the best attitude to have in such stale times is the one Cohen has. “I’ve always looked at soft markets on the broker’s side as what every industry has to go through — a cleansing process. Those that are nimble and quick and can change their expense lines will position themselves to make the big move in the next hard market.”

Luckily, IMA is run in such a way that it entered the soft market in a solid state. “The good news is we have no debt other than our perpetuation plan, which might argue is some form of debt. So in a soft market, the key for us is to manage our expenses and react in a quick enough manner.”

Soft market or not, the company is still looking at strategic plans to help reach that goal of doubling business within five years. At a recent shareholder meeting, IMA mapped individual business unit growth against industry best practices numbers. Cohen reports, “In employee benefits, the best practices group has their revenue around 15 percent. We’re at about 11 percent. I’d love to close that gap.” Also, the plan is to grow the personal lines business, one that to date IMA hasn’t focused on. “Best practices numbers are at 12 percent. We do just barely under 2 percent. That’s an area we could move into.”

Whatever area it decides to grow, IMA will stick to those processes that have made it successful — through its people and its unique way of looking at business.