Specialized Independence
Top 100 Agency Profile
Agency Name: The Horton Group Inc.
Headquarters: Orland Park, Ill.
Year Founded: 1971
Locations: 15
2009 Total P/C Premiums: $258.3 million
Commercial Lines: $221.4 million
Personal Lines: $36.8 million
Other than P/C: $269.7 million
2009 Total Revenue: $46.3 million
Principals: Glenn Horton, Frank Poppie, Charles Naso, Thomas Palmer
No. of employees: 309
What began with two brothers running separate, personalized agencies from their homes in the suburbs of Chicago has flourished into one of the largest privately-held firms in the Midwest. In the late 1970s, brothers Don and Bill Horton came together to form an agency. In the early 1980s, Don Horton’s son Glenn joined with his partner Frank Poppie, and bought the family agency that is now known as The Horton Group. Since then, The Horton Group has grown to a company with just seven employees to an operation with some 300-plus employees. That is just one of their many positive transformations over the decades.
“When Frank and I bought the agency, we had $340,000 in commissions,” said Glenn Horton, CEO of The Horton Group. “Now we’re approaching $50 million.”
The Horton Group has moved from a mom-and-pop, traditional store-front insurance agency to a professionally run corporation, Horton says. The firm’s property/casualty, risk management, safety and personal lines divisions make up roughly two-thirds of its business. Employee benefits rounds out the remaining one-third. The firm operates a strong construction, municipal and manufacturing division as well.
Horton says the firm places a special focus on what he calls the “complex needs” of every client. “We have clients with complex needs and limited resources,” Horton says. The ideal commercial client is a somewhat larger company with complex needs, and limited resources to deal with some of those needs, he adds. “Our value proposition is that we bring those resources to our clients, whether they be wellness resources, or loss control resources, or claims resources in other words, we tend to play right under the risk management buyer.”
Focus on Specialty
Most producers at The Horton Group today specialize in the various industries they serve – a change from years ago – and something Horton considers a major milestone for the agency. Another milestone in the agency’s growth has been the change in management structure, a necessity for any fast-growing agency, Horton says.
“In a lot of agencies, the agency owner wears a lot of hats, like manager and chief producer and all those sorts of things,” Horton says. But as an agency grows in size, there comes a time to invest more in management. “You reach a point where you have to make the decision to invest in professional management, because the people who do the insurance work don’t necessarily have the skills that you need for that (management). Making investments in professional management was certainly one of our early milestones.”
Kelly Kehoe, president of the Horton Select Division, says employing specialized sales teams was an important step for agency growth. “We didn’t employ an attorney and a paralegal before, we didn’t have a claims advocate, let alone an entire claims team, but in order to sell the services, we had to have the bench,” Kehoe says.
Rather than being a jack of all trades, Kehoe says, “we have construction specialists, trucking and transportations specialists, and manufacturing specialists.”
The Horton Group offers specialists in everything from health care to retail to pool and spa risks. It’s this specialization that gives producers the knowledge and expertise they need to talk to clients about specific exposures and how best to address them, she adds.
The Horton Group also offers its clients other value-added services, including legal services for reviewing contracts, assistance in developing contract purchase order agreement wording, and an in-house claims unit to help monitor the claims process.
Learning, Growing and Culture
Like any growing business, The Horton Group has had its share of learning experiences along the way.
“I don’t know that there are any great what I would consider strategic blunders,” Horton says. But when asked to look back at strategies that could have been done differently over the years, Horton was quick to point out the firm’s stance on acquisitions versus in-house development. In the last 10 to 15 years, Horton says, he wishes the agency had focused a little less on acquisitions and a little more on hiring and developing producers.
“We still have a fair amount of organic growth, but we’d like to have more but we’re making up for that, so no huge regrets, but certainly plenty of tactical mistakes,” Horton says.
In the last 15 years, The Horton Group acquired some 20 agencies in total. “We’ve certainly bought agencies that we regretted buying, and didn’t turn out the way we thought they should. We’ve certainly hired people that turned out not to be people we thought they were.” That’s all part of what Horton calls “tactical mistakes.” Even so, he adds, so far the agency has made no huge strategic mistakes.
Despite the agency’s dramatic growth over the years, Horton says some things about the agency’s business remain the same. “We still write a very diverse book of business in terms of size. We write a lot of personal lines, but we also write a lot of publicly traded companies. Our book of business certainly evolved along that to where we’re now able to compete with really any of the large national brokers on most accounts and we think we can do better. That’s probably been one of the biggest changes, just the type of business we’ve been able to work on.”
Mike Wojcik, one of the founding partners of the employee benefits division, says the culture within The Horton Group served as a strong motivator for him to join the firm 20 years ago.
“The type of culture that they had was truly an entrepreneurial setting where the producers treated their businesses as if it was their own business,” Wojcik says. “We like clients that are entrepreneurial in nature as well, independently-held, and companies that want to grow.” He says what has kept The Horton Group unique is its culture. “We still remain very much an entrepreneurial-spirited organization, which has never left us idle. We’ve progressed quite well as a result of that.”
Wojcik has been specializing primarily in employee benefits for 25 years, and has been part of the government affairs committee for the Independent Insurance Agents of Illinois for five years. He recently found himself in the unique position to educate clients on the long-term affects of health care reform.
Wojcik believes there are a lot of good things coming from the health care reform. “We needed to make some adjustments, in particular with the elimination of pre-existing conditions, and eliminations of underwriting based on individual’s health status. Those were important things. We needed to create accessibility, but we also need to create affordability.”
Wojcik is disappointed that, despite its good points, health care reform will not be the silver bullet to stop costs from going up.
International Relationships
Another milestone in The Horton Group’s development has been the agency’s work to expand internationally. Aside from its multiple locations in the United States, The Horton Group also has a location in China. Horton says there are no plans to open additional offices in other countries, because the firm believes it is able to serve international needs from the U.S.
“A big part of our business development and expansion in terms of accounts is focused around international operations,” Horton says. “We’re not really so much focused on offices outside the countries as we are with companies that are domiciled in the U.S. but have operations outside the U.S.”
Advising businesses with operations worldwide is a rapidly expanding field. “It’s just become so much more common to have medium-sized businesses with international operations,” he says. “It’s been a good growth area for us.”
Despite the distance, Horton says the firm maintains personal connections with its overseas clients. “The international work still retains a great element of personal touch. Part of our strike there is that we really sort of paid our dues and we’ve really done the work to develop personal relationships with other brokers and other markets all around the world. So if we get an account that has operations in London or some place like that, we know just who to call there and how to place that insurance.”
The Economy and the Insurance Market
The Horton Group has not gone unscathed by the recession and soft market. According to Kehoe, the tough economy has prevented the agency from maintaining its typical growth in revenues and, as a result, the agency has had to downsize its staffing.
“The unfortunate part is, in the small commercial area we’ve lost a lot of business because smaller businesses are going out of business, therefore not needing insurance,” Kehoe says. “But in the large commercial side, the insureds are able to stay in businesses a little bit longer, but their sales, and their revenues are down, which then means lost premium.” That means the agency has kept many key clients, but is seeing less premium and revenue from those clients.
The Horton Group has been able to weather the storm better than some others due in part to its mix of business, according to Horton.
“Our book is so diverse in terms of classes of business that a lot of the areas that we’re concentrated in really didn’t get affected too much by the economy,” Horton says. The bad economy has hurt the agency’s bottom line but not as badly as some of its clients.
Horton doesn’t expect the soft insurance market to improve much either, at least not any time soon. “I’m not optimistic that we’re going to get a turn of the market any time soon,” he says.
Kehoe says competition in the insurance market continues to put doward pressure on rates. “What’s happening is that those couple of carriers that are trying to take the position of getting some minor increases and some much needed increases, they’re not able to do it because there’s still too many carriers out there that are more worried about what they need to do to get cash flow in to help them out, because they’re struggling as well. So then they’re discounting prices, they’re still giving away the firm, so to speak, just to get the premium in because they need the cash flow.” That philosophy is making it more difficult for the stronger carriers to stand firm on getting much needed rate increases today, she says.
Staying Independent
Horton says he sees an independent future for The Horton Group, and a future that will perpetuate the agency internally. “Our plan would be to double the size of the agency about every six or seven years,” Horton says. “So we still have a pretty aggressive growth plan for the future and intend to remain independent while we do that.”
Kehoe says they’re also looking to focus more on international accounts. “We’ve done really well in small commercial and mid-market, but we’ve not really tapped into trying to target really large clients. So that’s our focus and strategy for the next five years or so.”