Grinnell Mutual Grows from Complacent to Dynamic
A mutual insurer created more than 100 years ago to reinsure farm mutual insurance companies in Iowa has grown faster in the past five years than it did during the previous 10 decades, its president and CEO says.
Organized in Greenfield, Iowa, in 1909, Iowa Farmers Mutual Reinsurance Association eventually moved to Grinnell, Iowa, and over the years grew into the entity that is now known as Grinnell Mutual and describes itself as the largest primary reinsurer of farm mutual companies in North America.
“We’re a 107-year-old company,” said Larry Jansen, president and CEO. “It took us 102 years to grow to about $300 million of surplus. In the last five years, we’ve almost doubled that. At the end of this year, we’re going to be close to if not exceeding $600 million of surplus.”
Jansen, who took over the leadership roles at Grinnell Mutual five years ago, has been with the company for 38 years. He attributes the recent rapid growth to “the hard work of our employees in the building, our membership, the mutuals we reinsure and the agents that produce our business.”
Grinnell now has more than 250 mutual affiliates and works with more than 1,600 local independent agencies in Illinois, Indiana, Iowa, Minnesota, Missouri, Montana, Nebraska, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Wisconsin and Virginia.
The company didn’t come upon this growth trajectory by accident. It was a goal Jansen set when he took over as president and CEO, and one he sought to inspire his employees, members, affiliates and agents to embrace.
“One of my concerns was that we had become a typical 100-year-old company. We were very complacent, we were very lethargic, we were very accepting of the status quo,” he said.
He wanted to “add some vitality, energize the company and get employees more involved,” as well as to give people a reason to come to work every day. So, he set sights on becoming a $1 billion company within 10 years.
Recognizing there were problems within the farm mutual reinsurance business, that’s where the company chose to begin working on achieving that goal.
“We had seven or eight years prior to that timeframe where we’d seen significant underwriting losses. We had recoveries from our reinsurers that were unbelievably large,” Jansen said.
He began attending regional meetings with farm mutual customers, giving “them some pretty bad news. I said, ‘I’ve looked at the experience over the last seven or eight years, and the problem we’re having is we’re totally underpricing our product. Over the next three to four years, we’re going to have to double the rates.'”
The company followed through with that plan and dramatically turned around its underwriting experience in the farm mutual reinsurance book, which represents about a third of the company’s business.
Helped by rising rates and by several years of favorable weather patterns, Grinnell has gone from “losing $50 million every year on that book” to “making $50 to $60 million the last three or four years,” Jansen said.
Farm mutuals are limited in most states as to what kinds of business they can write and where they can write it; most are limited to home or farm-related insurance. Grinnell Mutual is able to offer a wide spectrum of commercial and personal lines and makes that business available to the independent agents who also write for the farm mutuals Grinnell reinsures.
“That’s how we grow our direct side is through those agents that write for those farm mutuals,” Jansen said.
The direct business makes up two-thirds of Grinnell’s business, and is a “strong, stable book of business” that has experienced underwriting profits for 13 of the past 15 years, Jansen said.
On the direct side, the company views agents as being its primary customer.
“We spend a lot of time every year going out and having area meetings with our agents to let them tell us what they like, what they don’t like,” he said.
One thing agents have said is that, technologically speaking, Grinnell Mutual has been difficult for them to work with because of its antiquated legacy system. The company listened and is now in the process of overhauling its technology from top to bottom.
Jansen said the company chose the Guidewire system and expects the transition to be “a multiyear project to get it all up and going. We’re actually bringing in the whole shebang. We’re not buying just billing or just the client, we’re buying the policy side, the billing side, the claim side, the whole shebang. It’s a major undertaking.”
It’s all about doing the right thing for the employees, agents and policyholders, he said.
“Our company, 107 years ago, was formed by those companies that we reinsure. Our board of directors is made up of 12 farm mutual managers,” Jansen said. And that board wants to make sure they do the right thing for both the company and for the member mutuals they represent.
Grinnell Mutual at a Glance
Established 1909
President/CEO Larry Jansen
“A” rating from A.M. Best since 1991
Direct written premium: three years ago versus today
Dec. 31, 2013 – $515,326,885;
Dec. 31, 2016 – $611,969,301 (18.75 percent increase)
Policyholder surplus: three years ago versus today
Dec. 31, 2013 – $399,940,041;
Dec. 31, 2016 – $589,902,304 (47.5 percent increase)
How many states the insurer wrote in three years ago versus how many it writes in today
2013 – 13 states; 2016 – 15 states
Mergers, affiliations or partnerships entered into in the past three years
Partnerships include Mutual Boiler Re, Beazley, Risk Control Technologies, Guidewire, Cynosure and Palomar Specialty Insurance Co.
Cyber Liability and Data Breach Response coverage