West Bend Mutual Insurance Co. recently moved into a 214,000-square-foot expansion that doubled the size of its corporate headquarters.
Earlier this year, the company rolled out a new marketing theme, “The Silver Lining,” which has been featured in the company’s first television commercials and has replaced the company’s long used marketing slogan of “Legendary Service.” The new marketing message, which includes the mission statement, “The worst brings out our best,” focuses more on exactly what the company does.
Next year, the leadership at the top of the company will change. Kevin Steiner, currently chief operating officer and president, will become the company’s new chief executive officer.
Current CEO, Tony Warren, will retire and become chairman of the board. Warren will replace current chairman John “Rocky” Dedrick who turns 70 next year. The company’s bylaws state you cannot serve on the board of directors if you are 70 or older.
Dedrick’s exit is significant because the company’s executives say he transformed the firm during his leadership as CEO in the 1980s and is largely responsible for its success today.
“(Dedrick) really set the tone for our relationship model with our independent agents and our legendary service model,” Steiner said. “If you think about our core competencies, I really think first and foremost it’s really about people and about the relationships we have with our associates and agents and also the service we provide. He set the tone for that culture. Since that time we’ve maintained and improved upon that culture.”
Warren replaced Dedrick as CEO, and next year Steiner will replace Warren. Steiner, 51, has worked for West Bend Mutual since 1994.
Steiner, who grew up near Marshfield, said that when got out of graduate school (he attained his bachelor’s degree at the University of Wisconsin-River Falls and his master’s degree in business administration at the UW-Eau Claire), he considered West Bend Mutual, “a sleepy mutual.” That was about the time Dedrick because CEO and began transforming the company.
“When I started my insurance career, my wife is from West Bend, and my father-in-law said, ‘What about West Bend Mutual?’ I said, ‘Well, it’s kind of a sleepy mutual.’ That was the time Rocky took over.”
Little did Steiner know he would later be hired by Dedrick and eventually would become the CEO of what no longer is a “sleepy mutual.”
Steiner worked in the Grand Rapids, Mich. office for Stevens Point-based Sentry Insurance and then for Grand Rapids, Mich.-based Citizens Insurance Co. before joining West Bend Mutual. He worked in Michigan for about 11 years before his return to Wisconsin.
When he came to West Bend Mutual, Steiner said he took a pay cut because he knew the VP of sales was planning to retire and hoped to get that job. At West Bend Mutual he worked his way up from association manager to corporate sales manager, vice president of sales, VP of marketing (which included underwriting responsibilities), senior VP and then COO and president.
When he becomes CEO, Steiner says he doesn’t plan to radically transform the company. He isn’t obsessed with making the company bigger. But, he said the company must continue to grow and strive for the next level.
“We’re going to make change, but I wouldn’t describe them as big,” he said. “We need to go to the next level. Bigger is not better, but if you don’t grow eventually you die. You stagnate. We need to believe we’re a growth company and act like a growth company.”
Steiner said chief financial officer Dale Kent and chief legal officer John Duwell competed with him for the CEO job. Although they didn’t get the job, Steiner said they have been tremendously supportive of him and along with chief information officer Jeff Frazee, they will play a vital role in the future of the company.
“This is a company with 1,000 people,” Steiner said. “We’re headed toward a $1 billion in (annual) sales in the near future. One person can’t run this company. Our success depends first and foremost on our senior team and then the rest of our officers.”
“(Becoming CEO) is a tremendous opportunity (for me), but I fully recognize that it is with the help of Dale Kent, John Duwell, Jeff Frazee and the rest of the team that is going to make us successful,” Steiner said.
Steiner says the company’s goal should be to become, “the dominant regional property and casualty company in the Midwest. And being dominant doesn’t mean we are the biggest. What it means is, we’re represented by independent agents and in those agencies we’re the company of choice. If we’re the company of choice in our agents’ office, then we’re going to grow.”
West Bend Mutual currently serves seven states: Wisconsin, Illinois, Minnesota, Iowa, Indiana, Michigan and Ohio. The company may add a few more states, Steiner said.
“I could see us being a 10 to 12 state regional company,” he said. “We’re going to keep adding agencies. We’ll add some geography. (But) our goal is not to be a 25 state company.”
Any additional states will likely be Midwestern states, fitting in with the rest of West Bend Mutual’s coverage area.
“We’re a relationship company,” Steiner said. “What we know is Midwest relationships. That’s what we’re really good at.”
Property and casualty insurance companies that only serve the Midwest, such as West Bend Mutual, often have an advantage over national insurance companies because the national companies are exposed to the coastal areas that are subject to hurricanes and earthquakes. However hurricane activity has dropped off in the last couple of years and the Midwest has been with an increase in storm activity, Steiner said.
“What’s happened the last couple of years is (the coasts) have been relatively hurricane free,” he said. “The national companies have done very well. In the Midwest we’ve had a significant amount of storm activity. Both in the winter, obviously with this last winter, and then last year we had a significant amount of hail and summer storm activity. So that certainly has put pressure on our bottom line. If you look at first quarter financial results for Wisconsin insurance companies, claim counts are up a good 25 percent because of winter storms. It’s interesting. Things seem to cycle and right now we are feeling the brunt because of weather, whereas the coasts have been relatively hurricane free.”
The good news for area businesses is that the property and casualty market remains very competitive and the insurance rates continue to soften, Steiner said. However, that poses a major challenge for the insurance companies themselves.
“It obviously puts a lot of pressure on our bottom line and our top line because we’re reducing renewal premiums,” Steiner said. “So it’s really hard to grow the top line and by reducing premiums we’re giving away our margin. The soft market impacts the top line and the bottom line. I’m anticipating that hopefully we are getting close to the bottom of the cycle (of rates softening) because we’ve now been for a good four years reducing our rates, the industry has. We’re starting to feel the effects of that from a profit perspective. I’m anticipating that things will bottom out. I’m not saying that pricing will increase, but we anticipate the market bottoming out over the next year or so.”
When insurance rates finally do go up again, West Bend Mutual’s net written premium will quickly move from about $672 million a year to $1 billion a year, Steiner said.
“We’re not going to get there ($1 billion in annual sales) in a soft market. But when the market turns, and premiums go up 15 percent, it only takes a couple years,” he said.
“We’re optimistic about thefuture here.”
Kevin Steiner
Title: Chief operating officer and president (will become CEO next year)
Age: 51
Family: Married to Linda, and they have four children
West Bend Mutual
Location: 1900 S. 18th Ave., West Bend
Web page: www.wbmi.com
Number of employees: about 1,000
Total assets: $1.5 billion
2007 net premium written: $672 million
2007 net income: $35 million
