The claims management firm, Ward North America, Inc. (San Diego) has come a long way in recent years, thanks to an aggressive expansion strategy. Valerie Denney reports.
It is impossible to trace the development of Ward North America without first discussing Jeffrey S. Ward, chairman and ceo and the firm's founder. Mr Ward began his career in 1979 as a trainee property/casualty adjuster for A.L. Wisdom and Associates, a Southern Californian based claims company. In 1988, following the owner's retirement, Mr Ward bought the company. This proved a hectic time since in the same year he founded J.S. Ward & Company, which operated as a third party administrator (TPA) for self-insurers, carriers, captives and reinsurers.
By 1991, both companies had caught the eye of Thomas Howell Group, an international loss adjusting firm based in London. The Swiss-Re owned firm acquired the operations, out of which emerged Ward-THG. From 1991 to 1995, Mr Ward served as president of Ward-THG and on the management board of Thomas Howell Group (Americas). In December 1995 he spearheaded the management buyout of Ward-THG and sister company, the Atlanta based Gay & Taylor, supported by lead investor Conning & Company, based in Hartford, Connecticut. It was a major move. The combination of Gay & Taylor operations with the Ward-THG division formed one of the largest independent adjusting firms in the nation. Also, with Gay & Taylor on board, Ward-THG, Inc., the name of the newly formed adjusting firm, could boast origins dating back to 1928.
At the time of the buyout, Mr Ward remarked: "we believe many opportunities exist to expand our operations through internal and external growth to become the pre-eminent independent claims servicing company." Ward-THG, Inc. made no secret of the fact that it planned to aggressively expand through acquisition of strong local and regional adjusting firms.
Mr Ward has proved to be a man of his word. The company has seen significant development in recent years. In 1997, the company name was changed to Ward North America, Inc. to reflect anticipated expansion into Canada. And as Mr Ward explains, the current "revenue rate is in excess of $40 million and growing at approximately 25% internally and another 20% through acquisitions. New accounts and pending acquisitions in the US and Canada will bring revenues in excess of $65 million for 1999."
Further fueling this ambition has been GE Capital's acquisition of a 35% interest in the firm. In addition, Conning & Company, in which GE Capital is a major partner, has acquired further shares, bringing its interest up to 25%. (Mr Ward holds 25% and the remainder is with senior management.) Paul Gelburd, managing director at GE Capital's Equity Capital Group, has gone on record saying that: "Ward North America is well positioned to respond to the growing trend of insurers who need to outsource claims services in order to compete cost effectively in a soft market."
Meanwhile, Gerard Vecchio, senior vice president of Conning and Company, has emphasised the strategic significance of GE Capital's investment. "Not only does the additional capital allow Ward to aggressively pursue its role-up strategy, but GE Capital's participation as a customer should provide Ward with increased visibility in the claims outsourcing markets. This increased presence should result in higher quality service at lower costs for all customers."
Mr Ward sums up the situation as follows: "Having GE Capital and Conning and Company as strategic partners will enhance our business as we continue to expand our service capabilities through internal growth and acquisitions."
Talking of acquisitions, Ward North America has been busy of late. At the beginning of the year, the company acquired one of the largest third party administrators in Texas, Willis-Rollinson, along with their cost containment subsidiary, WRI Services, Inc. Established in 1983, Willis-Rollinson became a leader in providing claims services in the area of workers' compensation, general liability, auto and property.
With revenues in excess of $8 million, Willis-Rollinson was well known in the London market, managing numerous claims programs for Lloyd's syndicates and brokers.
Merging Willis-Robinson and the Texas division of Ward North America provides enhanced service capabilities for the national and global clients of Ward. The new operations will bring together over 200 employees in six locations: Dallas, Austin, Beaumont, El Paso, Houston, San Antonio and Fort Worth.
Remarks Mr Ward: "This acquisition strengthens and diversifies our services in Texas. There are great synergies between the two organizations with our strong industry focus in areas such as public entity, transportation, construction and the excess and surplus market, including London."
In August, the company acquired Toronto based Interspect Ltd., a national network of small, independent claims management firms working on local and regional levels which generated $25 million in revenue last year. Ward North America bought the shareholder companies' interests in Interspect and now plans to purchase most of the companies in the network.
The new firm, called Ward-Interspect Ltd., will attempt to expand Interspect's client base in property, auto, general liability, E&O, and professional liability.
Ward North America will continue to expand in Canada through both new business development and additional acquisitions, stresses Mr Ward. "We see an excellent opportunity for expansion in the Canadian market on a similar but smaller scale to the consolidating US market. We see the trends in Canada following those in the US and our customers, both in the US and London markets, are looking for quality outsourcing solutions in Canada."
Mr Ward perceives plenty of other opportunities. As alluded to earlier, a soft market is good news for efficient claims management firms. With insurers looking to reduce their staff size and operating costs, outsourcing is increasingly prevalent. "The soft market, excess capacity and the consolidation activity have all had an impact on this industry," remarks Mr Ward. "These trends have created opportunities for service providers to efficiently manage programs in all lines of insurance."
He adds, however, that "it is more difficult for smaller companies without a national network to compete."
Another opportunity Mr Ward highlights is the growth of "virtual" insurance companies, which involve fronted programs requiring outsourced partners.
In addition, Ward North America's insurance carriers and reinsurance partners are now taking a more active approach and asking for more "one-stop" solutions with integrated systems and loss control. In order to support this development, the firm recently formed a RISK SERVICES DIVISION to provide loss control programs which identify trends and reduce the frequency and severity of losses.
As Mr Ward points out: "We are training our customers on how not to need our claims services. We feel this is important in building long-term partnerships with our customers."
That Ward North America will continue to grow, both organically and through acquisition, is not in doubt. Asked what other companies are likely to come under the Ward umbrella in the near future, Mr Ward remarks that, "we are in various phases of negotiations and due diligence with at least 10 other companies."
He adds that the company will be expanding product lines and offering additional outsourcing solutions to (re)insurers in the future. "We expect the revenue will exceed $200 million within the next few years. We also expect more strategic partnerships with brokers, MGAs, and (re)insurers."
Any chance of venturing outside of North America? Mr Ward does not rule this out. He points to Ward North America's association with CCS Global which services the firm's multi-national clients. CCS Global is run by former senior managers from Thomas Howell Group, including Paul Clayton and John Stitch. "There is no reason why we should not look to the UK, Europe and Asia in the future," says Mr Ward. "At the moment, however, we are focusing on building our North American presence."
Ward North America has quite some presence already; 110 offices in 42 states - and growing. It will not be long before the firm starts looking further afield.