Agent-owned Underwriter Makes Good on Investment
November 30, 2009
Source: The Title Report
Getting its start in 2005, Alliant National Title Insurance Co. is already noting unprecedented growth and expansion.
The agent-owned underwriter model on which the company is based wasn’t a new concept, but it’s one that has proven fruitful, said David Ginger, president of Alliant National and president and part-owner of its holding company, Agents Investors Group of America LLC (AIGA). Before getting the company off the ground, Ginger had twice worked for agent-owned underwriters, both of which were subsequently purchased by national underwriters. “I’ve learned a lot of lessons on what to do this time,” he said.
An initial meeting of potential agent-owners was held in October 2004, in Austin, Texas, where the concept was fleshed out. Later, Ginger joined with Bob Grubb, who today is the company’s CEO and is based in Longmont, Colo.
“We sat down together and began the concept of strategically developing what we call the agent-owned underwriter we know today,” Ginger said. By 2005, AIGA was filed as an LLC in Colorado, where Alliant National was granted an insurance license in September 2005. Soon after, the company was licensed in Texas.
“That was the beginning. That set the precedence and allowed us the revenue to force through and move forward in 2007, 2008 and 2009,” Ginger said.
Of the dozen agents who were brought in for the initial meeting in 2004, only two chose not to pursue the investment. And while Alliant National remains under the majority ownership of its management, Ginger said he hopes that share will continue to trend lower. “Tomorrow I want to own even less than I have today. The reason for that is I’d rather own 4 or 5 percent of something very large than 100 percent of something very small,” he said.
Each year, Alliant National holds an offering to its agents, selling units in parent company AIGA, from which they are able to realize profits from their remittances. The model dictates that AIGA and its management handle the title operations, while agents produce the title premiums.
“They take care of raising the business, earning the income and competing in their local markets; we take care of their investment called the underwriter and we continue to grow the underwriter,” Ginger said.
Ginger said he wants to ensure that units will always be available to agents wishing to invest, something that is a selling point to writing for Alliant National. And, soon, the new company will begin realizing dividends.
“This is a start-up company, so we are building in equity. Right now, the equity is an increase in the value of the company and, in turn, their units. In the next 18 months, we will start paying dividends, and then the proof is in the pudding,” he said.
While the payoff has yet to be seen, additional proof has been realized in units today offering a value 80 percent greater that at the very first offering.
Despite the economic conditions nationally, Alliant National was able to mark a substanial growth in the first nine months of 2009, operating in five states with an independent agent network present in 41 states.
Highlights of the company’s success this year include a gross premium increase of 170 percent in the first nine months of 2009 as compared to 2008. Gross premium revenue, too, increased 170 percent over the first nine months of 2009 compared to 2008, with solid profitability. And indicators today suggst strong revenue in Q4.
In addition, Alliant National finished the third quarter doubling the number of independent agents representing the company. Moving forward, Ginger said the company is looking to become licensed in more states over time and create a national referral network for agents to use to direct out-of-state business to one another.
The agent relationship
The environment today is one that is challenging, while at the same time one that creates opportunity for a company that is in the market for solid independent agents.
When many are facing cancellations from national underwriters because they are unable to meet new or old remittance requirements, Alliant National has made it a goal to pick up that business. For example, in a hard-hit state like Florida, an agent that once netted its underwriter $100,000 in premiums may only be doing $20,000 in business today. “We’re signing them because when this market comes back, they may be even better because a lot of people got out of the market, and it’s going to be a better market for a couple of years for those agents who survived,” Ginger said.
Alliant National has no percentage requirement for business, and even encourages independent agents to seek out other underwriters with which to sign. “We’re a small underwriter. An independent agent should have other resources,” Ginger said. “If you’re really looking out for the goodwill and the benefit of your agent — the sooner those things happen — it creates a relationship.”
However, while the company’s growth may be attributed to its increasing agent base, the additions haven’t come without an effort to seek them out. “You have to go out and get the business. You have to ask for the business,” Ginger said.
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