Profile Article
Corporate Report Wisconsin magazine, April 2005 issue, published by Trails Media Group
A+ Vision
By staying focused on its core strengths, Acuity has its sights set on even greater success
by Tim Solinger
Drive past the headquarters of Acuity Insurance on Interstate 43 near Sheboygan and you'll see a new, expansive corporate facility with well-maintained grounds and striking architectural features. What you'll not see, though—inside or out—is anything approaching ostentation or opulence.
This difference is best symbolized by "Petey," a small papier mache dog that stands in the company's galleria, in sharp contrast to the fine artwork around it. Petey's most notable feature is his raised back leg, which underscores the company's scrappy, grounded, "in your face" attitude.
A papier-mache creation of a dog relieving itself—standing in the building galleria? It's very much a part of the company's vision and values according to Ben Salzmann, president and CEO of Acuity.
Salzmann says he was looking for some art last year for the company's new facility when he spotted the papier mache dog at a small store. He promptly bought it and then plopped it down in the building's galleria.
He wanted to make a point with his employees about how far they had come since the property and casual insurer's dramatic transformation and growth from six years earlier, which includes receiving an upgrade to an A+ rating from A.M. Best in 2003.
A "junkyard dog" attitude
Salzmann says that when the employees got together for one of the company's "town hall meetings," he was asked about the dog.
"I told them that six years earlier we were struggling," he explains. "I said that since then we had done so well together it might seem like a good time to coast. But if we did that, we would lose everything that we had accomplished. I told them that we got to where we are by being a junkyard dog. Petey is a reminder that we are a junkyard dog. Either we continue to be a junkyard dog, or else the dog pees on us."
Salzmann says his point really connected with employees, especially with those who came to Acuity from insurance companies that had gone bankrupt or from companies that had their operations gutted following a takeover.
Talk to Salzmann for awhile and you'll soon see some unmistakable similarities between the values of Acuity and his own.
"I grew up in an extremely modest home in Wausau, and I had to work and pay my own way to college. I went to a local, two-year school first, otherwise I could not have afforded to attend school," says Salzmann. "I always viewed life as needing to work harder and drive harder—as soon as you start coasting, you're dead."
Salzmann began his career in the insurance industry in 1980 as a marketing analyst with Foremost Insurance in Grand Rapids, Mich. At Foremost, he worked in a smaller department and "was taught to almost be an entrepreneur" within a larger company.
He later added a computer degree to his MBA from UW-Madison before leaving Foremost in 1990 to join Acuity—then known as Heritage Mutual—as vice president of information services.
His move was prompted by a desire to return to Wisconsin and to grow as part a broader, multi-line insurer. "Heritage wrote insurance in almost every area of business insurance, as well as personal lines. I thought it was a huge opportunity," he says.
From Heritage to Acuity
While Heritage offered Salzmann the professional growth opportunities that he was seeking, it also presented some significant challenges. One of these was joining the management team in transforming the company to move it into the future, an effort that included taking on a new name.
"Heritage was such a common name," Salzmann explains. "We could not get ownership of it, and our concern was that we could possibly get into a costly legal battle over the use of the name. We wanted a new name that was more proactive and that looked more to the future."
A naming company was hired that eventually came up with "acuity," meaning "clarity of vision," and the new name was officially adopted about four years ago.
Another challenge for Salzmann and the management team was reversing employee morale. Salzmann says that when he joined the company, it was viewed as an unpleasant place to work.
"My biggest challenge was to show employees that we were going to respect them, that we needed them and trusted them, and that we were going to work with them as a team. We had to get people into the right jobs. Fortunately, this was something that we were able to work through," he says.
In guiding the company today, Salzmann emphasizes the continuing need to be objective and to get the right people into the right positions. "Then you have to trust them and let them do their jobs," he says. "That way you don't get tied down, and that's when the magic happens."
Dramatic results
At Acuity, the "magic" has happened. Through the efforts of its revitalized workforce—which currently consists of more then 750 employees—the company has achieved dramatic results across a variety of performance metrics.
In 2003 Acuity saw its policyholder surplus grow by $84.6 million, by far its best year ever. In addition, it enjoyed a 15.4% growth in written premium—50% higher than the rest of the industry, and it achieved a combined ratio of 92.3 (losses and expenses as a percentage of written premium), which was more than 10 points better than the industry average.
Acuity also issued a record-breaking $151.1 million in new business and awarded more than 14,100 continuing education credits to independent agents, up 29% over the previous year.
Because of these and other achievements, Acuity has been widely recognized and has received numerous honors. These include a recent upgrade to an A rating from Standard & Poor's, and being named in 2004 for the fifth consecutive year to Ward Financial Group's "Ward's 50," a benchmark group of the insurance industry's top-performing companies.
Salzmann says he is especially gratified by its strong ratings from A.M. Best and Standard & Poor's, which attest to Acuity's financial strength.
In addition, Acuity was honored as the best mid-sized employer in the nation in 2004 by the Great Place to Work Institute, and it was named to Fortune magazine's Top 100 Employers (regardless of size) in 2002. Other honors include a record eight awards in 2003 from ACORD, the non-profit technology standards developer for the insurance industry, and being named to the InformationWeek 500, a listing of the most innovative users of information technology in the United States. Acuity also received the National Company Award of Excellence in 2001 from the National Association of Professional Insurance Agents.
Training and process improvement
For all of the company's success and recognition, Salzmann is all too aware of the dangers of complacency. To help keep Acuity on the right track, Salzmann and his management team have put into place a business model that relies on continual training and process improvement to ensure innovation.
Salzmann points out that training is especially crucial for succeeding in the insurance business. "Insurance is all about intellectual property. It involves assessing risk, determining pricing, and, in the event of a loss, handling a claim."
He says that Acuity continues to make a strong commitment to training even as many other insurance companies are cutting back. The company provides training for its independent agents as well as its employees.
"We recently sent 100 people to UW-Madison for management training, and we'll continue to do this," Salzmann says. "We also pay employees who take night school courses or who study to earn insurance industry certifications."
To identify opportunities to streamline operations and reduce costs, Salzmann says Acuity heavily emphasizes the constant refining of its workflow processes. "One out of five employees at Acuity is involved in workflow automation improvements," he adds.
In looking ahead, Salzmann says Acuity is guided by a vision that consists of five core strengths: underwriting discipline, strong sales and marketing, efficient technology and service, claims expertise, and broad product range. These five strengths are continually used to evaluate new and ongoing strategic initiatives.
"One of the things that really makes us successful is our split personality," Salzmann explains. "With sales we are swashbuckling. With technology we are innovative, and financially we are very conservative."
"I think we have the right kind of split personality to be a successful insurance company. This is why we have grown so fast and why we are so profitable. The management team here in the last six years has grown this company from a $200 million to a $700 million dollar company. We also have grown our equity so that we have the financial strength to meet any obligation that we ensure."
Not bad for a junkyard dog.
Sidebar:
Ben Salzmann: An Inside Look
Morning start: "I start my mornings the night before. I go through all my emails and phone messages, and then I make a list of the top five things I want to do the next day."
Recommended books: The Power of Strategic Thinking by Michel Robert, The Intelligent Asset Allocator by William Bernstein, The Naked Corporation by Don Tapscott and David Ticoll, and The One-Minute Manager by Kenneth H. Blanchard and Spencer Johnson
Last book read: Pillars of the Earth by Ken Follett
Best work moment: "Any time I get to speak to our field agents."
Unusual advice: "Make commitments. You may regret decisions you have to make because of the need to make choices, but you won't regret your life."
Interests: "My wife and I love art history. Whenever we go on vacation, we always try to line up a visit to an art museum."
Favorite Wisconsin getaway: "I live in mine—Kohler, Wis. We have world-class golf, great restaurants and a small-town atmosphere with hunting, hiking and canoeing nearby."
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