Agent Of Change
Gary Thompson Takes The Helm Of Columbia Insurance Group
by KATHY CASTEEL
photos by L.G. PATTERSON
Gary Thompson’s Halloween costume came as no surprise to his co-workers this year. Dressed as the New Year’s baby, he cut a prescient figure at the office festivities, poised to take on the top job at Columbia Insurance Group on New Year’s Day 2012.
Make no mistake, though: Thompson is no babe in the business world. After 22 years with Columbia Insurance Group, the 51-year-old president and chief operating officer will add CEO to his list of company titles on Jan. 1. The CIG board of directors named Thompson as the retiring Robert Wagner’s replacement 2½ years ago, clearing the way for a seamless transition in the hierarchy of one of Columbia’s largest private employers.
This quiet change at the helm offers a welcome bit of calm as Columbia Insurance Group gears up to face new trials that await the storm-tossed industry. Coming off what Thompson calls the worst financial year in the company’s history, the new CEO has his work cut out for him.
“His challenge will be to lead the recovery down the road to future success,” says the retiring Wagner. “I have absolutely no reservations turning the helm over to Gary.”
Wagner’s confidence in his protégé is an assurance borne out by long association. In 1989, then executive vice president Wagner recruited Thompson to CIG, making his pitch over lunch in Kirksville. Thompson left the meal with a job offer and soon left the Iowa insurer where he’d been working since 1983.
His arrival in Columbia was a homecoming of sorts. Born in Kansas City, Thompson grew up in Nevada, working farm jobs and dreaming of becoming a veterinarian. He enrolled at the University of Missouri in 1978 with plans to attend MU’s College of Veterinary Medicine.
“Organic chemistry changed my plans,” he recalls with a grimace. “That’s when I realized I wasn’t cut out to be a vet.”
Thompson graduated from MU in 1982 with a bachelor’s degree in agriculture and returned home to Nevada to farm and supervise a grain elevator. When Grinnell Mutual Reinsurance Co. came calling that winter, he joined the company as a marketing representative, managing the company’s property/casualty agencies in Missouri. In 1986, he packed up and moved to Grinnell, Iowa, to work as an underwriter. Thompson joined Columbia Insurance Group in October 1989 as vice president of reinsurance. He was 29 years old.
His climb up the CIG management ladder has been steady — in 1994, he became a senior vice president, still overseeing reinsurance, and joined the company’s executive committee. He was promoted to executive vice president and chief operating officer in 2002, directing the day-to-day operations of the company. He earned an MBA from Walden University in 2007, and in June 2009, the company’s board of directors named Thompson president and successor to Wagner, who had announced his retirement plans.
“This transition could not have gone any better,” says board member Bob Gerding. “The process and plans laid out by Bob Wagner to ensure that Gary was mentored but allowed the freedom to set his own path worked quite well.”
The change in title includes additional leadership duties for Thompson, who will add the company’s accounting, finance and legal departments to the operations he will manage.
“Any time there is change, there are questions,” Thompson says. “I’ve been addressing those questions as they arise, explaining that I’ve been a part of the management team for 22 years and chief operating officer since 2002, working hand-in-hand with Bob.”
Administrative change is not a routine occurrence at Columbia Insurance Group. Thompson is just the seventh CEO of the 138-year-old organization.
Columbia Insurance Group traces its roots back to 1874 when Boone Countians banded together to form Home Mutual Insurance Co. in Columbia to provide each other with fire insurance. A 1918 merger with two Rock Port insurance companies gave birth to Farmers Mutual Windstorm Insurance Co. In 1929, the Rock Port operations moved to Columbia, where the company’s headquarters have remained. Multiple mergers, acquisitions and name changes followed; the surviving entity became Columbia Mutual Insurance Co. in 1989. Now known as Columbia Insurance Group, five insurance companies comprise the group operating in 19 states through five branch offices. Of its more than 330 employees, 160 work in Columbia.
“Each branch office operates like a little company,” Thompson says. “They handle their own marketing, claims and underwriting. The home office provides the backroom functions. It’s very decentralized.”
CIG’s subsidiary companies offer only property and casualty insurance, sold through more than 800 independent agents around the country. They are heavily concentrated in commercial lines; three-quarters of policyholders are small to mid-size businesses. The company reported a net income of nearly $15 million in 2010, up 19 percent over 2009 income.
Financial figures from 2011 are expected to look quite different. An unprecedented string of natural disasters has made it the highest-ever loss year on record, saddling the insurance industry with billions of dollars in claims.
Dealing with disaster is only one of the challenges Thompson will face early in his term as Columbia Insurance Group’s CEO, says Gina Boone, vice president, secretary and general counsel.
“The primary challenges Gary will face will not be unique to CIG,” she says. “The lagging economy, extremely competitive insurance markets and escalating storm activity are pressures felt by all insurance companies operating in the Midwest. Gary is passionate about CIG. He has spent many hours evaluating our operations over the recent months and has challenged his management team to help identify and better position our strengths to set CIG apart from our competitors.”
It isn’t easy trying to stand out in the crowd of competition.
“There are nearly 3,000 property and casualty insurance companies in the United States,” Thompson says. “Most of our competitors are larger than we are; sheer size gives them some financial advantages. We need to earn a reasonable operating margin, and that’s a real challenge.”
The company continues to grow. “We have more policyholders now than we did at the beginning of 2011,” Thompson says. “We are a mutual insurance company, owned 100 percent by our policyholders. We’ve made some acquisitions — the most recent were three years ago when we bought two insurance companies in Texas and Georgia — but most of our growth is organic.”
Thompson does not plan to change the culture of Columbia Insurance Group. “Culture is what we’re all about,” he says. “We live by our core values.”
The company abides by seven core values:
- We believe our employees are our greatest asset.
- We believe that our customers should always be treated in the same manner that we would want to be treated.
- We believe the service we provide is critical to our policyholders and the well-being of society as a whole.
- We believe that earning a profit is good and contributes to the financial security we provide our customers.
- We believe that honesty, fairness and integrity in life and in business are essential and we will not tolerate anything less.
- We believe in being responsible corporate citizens.
- We believe in having fun.
Lofty ideals that could be difficult to live with at times, one might think. But Thompson doesn’t think so.
“We’re very transparent,” he says. “Take No. 5 — honesty, fairness and integrity. We had an employee who embezzled. We didn’t keep it quiet; we prosecuted. We’re not afraid to air our dirty laundry.”
This transparency applies at every level of the organization. In 2010, a board member from Arkansas was investigated by the Arkansas Department of Insurance for alleged misconduct in the handling of his business affairs. He was removed from the board immediately.
“We don’t tolerate dishonesty,” Thompson says. “We make it clear that we will not accept even the appearance of dishonesty or other impropriety.”
Thompson’s management style is upbeat and collaborative. “I’m a bit more direct than Bob [Wagner],” he notes. “Bob says I’m more impatient. Everything is on the table and the very best people are around that table, sharing expertise and perspective. We have open discussions and then must make decisions in a quick timeframe. There’s no need to be combative but I can be blunt in an effort to move forward.”
Colleagues laud his direct manner and visionary ideas but what they really enjoy is his self-deprecating sense of humor, which starts with his own self-styled job description: “chief servant, strategic thought leader, cheerleader and part-time janitor.”
CIG senior vice president and Columbia branch manager Roger Birdsong says Thompson’s humor shines through in their regular outings for Booche’s burgers or a round of golf.
“Gary often pokes fun at his game on the golf course,” Birdsong says. “When he hits a bad shot, he’ll say, ‘well that golf lesson last week really helped.’ This same sense of humor works well for Gary in our corporate setting. He uses it often and it not only builds camaraderie but keeps us from becoming so tense that we become less productive.”
Core Value No. 7 is an integral part of Thompson’s makeup, and one of the reasons Columbia Insurance Group is considered one of the best places to work in Columbia: These folks believe in having fun.
“Gary’s predecessor Bob Wagner would often say, ‘We take our work seriously but we don’t take ourselves seriously,’ ” says senior vice president Roger Ballard, the company’s chief financial officer. “If you’ve ever seen Gary’s Halloween costumes, you can tell Gary believes in this policy as well. His sense of humor makes him well-liked throughout the organization.”
Well-liked and well-respected, Thompson adheres to the first part of Wagner’s mantra as well. There is serious work to do as the insurance industry tries to recover from 2011’s losses and braces for what 2012 may hold.
“I don’t have a crystal ball,” he says. “Our target client is the small business looking to get help and save time. And we’re passionate about helping our customers. In Joplin last May, the tornado struck Sunday afternoon and we were there on the ground Monday. We used technology to create an overlay in our database that helped us predict which of our customers were in the path of the tornado, and used GPS to find them. We were done in two weeks. With our support, businesses were able to reopen, jobs were retained and families could begin rebuilding their lives.”
Thompson’s intricate knowledge of what to do and how to do it impresses 30-year industry veteran Jon Erickson, CIG vice president of claims. “Gary has a better overall understanding of insurance than anyone I’ve encountered,” Erickson says. “His focus is always about what’s best for the customer and the company, not what’s best for him. His example helps instill that dedication in the rest of us. He is also one of the most observant people I’ve met and asks questions that make us think about what we can do to improve service to our customers. He is consistently upbeat in approaching challenges.”
The challenge for Columbia Insurance Group is growth. “As a mutual company, we inherently face certain challenges in raising capital that stock companies don’t,” Thompson says. “We’re succeeding in doing that, even given these hard economic times, but we must continue to increase our financial strength to finance our growth.”
To maintain that growth, Thompson pushes the company to help policyholders by controlling rates, exposure, costs and loss.
“There are other things we can do to reduce the cost of risk for us and policyholders. We are using tools — such as loss control surveys — to manage costs. Additionally, directing our policyholders to seek risk advice from our independent agents is a great way to proactively manage the overall cost of risk.”
In with the new does not necessarily mean out with the old. It all comes back to the agent and that personal touch.
“Our historic marketing focus has been the independent agent,” he says. “Eighty percent of business insurance is sold through independent insurance agents. We have to position ourselves in his or her mind first.”
Columbia Insurance Group
Property & casualty insurance
330 employees (160 in Columbia)
800 independent agents
Licensed in 30 states
Policyholders in 19 states
Headquarters:
Columbia, Mo.
Branch offices:
Columbia
Omaha
Atlanta
Austin
Salina, Kan.
Companies:
Association Casualty Insurance Co.
Citizens Mutual Insurance Co.
Columbia Mutual Insurance Co.
Columbia National Insurance Co.
Georgia Casualty & Surety Co.
“My advice for Gary: be visible, be clear, be fair, be accessible. Lead, don’t just manage.”
— Retiring Columbia Insurance Group Bob Wagner
EXIT INTERVIEW
Robert Wagner Closes A Chapter At Columbia Insurance Group
Robert W. Wagner will step down as CEO of Columbia Insurance Group at the end of 2011, closing out a distinguished career that has spanned four decades with the same company. Capt. Wagner arrived in Columbia in 1971 after serving five years in the U.S. Army. Columbia Insurance Group hired the Vietnam veteran as an administrative assistant, putting him to work in the mailroom. He earned a bachelor’s degree in finance with an emphasis in risk and insurance from the University of Missouri in 1973 and worked his way up through the CIG ranks, serving the company as agency director, marketing manager, vice president of marketing and administration, and executive vice president. Wagner became chief operating officer in 1987 and took over as CEO in 1999. Now 70, he will remain as chairman of the CIG board of directors until August 2012.
After 40 years in the insurance industry — known as an outstanding leader, industry professional and “all-around good guy” — Wagner still has a few things to say …
You have been in the insurance industry for 40 years, and CEO of Columbia Insurance Group for 12 years. Looking back over your experience, what would you say have been the industry’s most notable milestones of the past four decades — the good and the bad — as it tries to keep pace with a changing world?
The use of technology has made a large impact, helping with distribution, internal processing and accumulation of data for more accurate pricing as well as communication with agents, policyholders, regulators, business partners, etc. Forty years ago, policies were hand-typed. Today the underwriting process — from the original application to a finished product — is automated. Coverages and delivery methods have evolved to meet the changing needs of our customers.
How has Columbia Insurance Group weathered the storms that have stricken the industry during your tenure as CEO — from natural disasters such as floods, tornados and ice storms to the political storms that rage through the halls of Congress and the state Capitol?
We have always been transparent to regulators and customers. We’ve flourished over the years because we maintain a strong capital position, exceptional expense control, a solid reinsurance program and intelligent but realistic underwriting.
Technology has changed the way consumers do business, which has changed the way businesses operates. How has the computer age affected your business?
Technology has eliminated inefficiencies and helped us reduce costs. Technology doesn’t reduce the need for personal interaction, but it does enhance it. Our customers still want the guidance and counsel of a risk adviser (independent agent). Technology has allowed us to handle more business without a corresponding increase in staff. It also enhances convenience for our customers with electronic bill payment and 24-hour claim reporting, for example.
What challenges do you see Columbia Insurance group facing in this next decade? Do you envision an altered landscape for the insurance industry?
A few challenges might be a foreseeably slow economic improvement, depressed investment climate and the trend of increasing frequency and severity of natural disasters (a big unknown). Additionally, with the baby boom generation retiring, it will be a challenge to replace their vast knowledge and experience.
A trend I feel likely to continue would be consolidation in the insurance industry — for example, larger generalist insurers spreading their risks internationally as well as specialty niche insurers focusing on doing what they do best.
How has Columbia Insurance Group changed since you arrived in 1971?
In 1971, we employed 17 people, had annual sales of roughly $3.5 million and operations in one state with a very limited portfolio of products. Today we employ about 330 people operating in 19 states; annual sales are $260 million on a full line of property and casualty products.
The best part, though, is our core values and principles have not changed.
What will you miss most from the workaday world at Columbia Insurance Group? What are you looking forward to in retirement?
I will miss day-to-day contact with people I know and respect: fellow employees, agents, regulators, other business partners, etc. In retirement, I will remain very active in the community. I currently serve as a trustee for Boone Hospital Center and am on the board of directors for the Columbia Chamber of Commerce as well as the Community Foundation for Columbia Missouri.
There should be a little more time for my wife, children and coming grandchildren.