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The Once and Future C&F - The Go-Go Years
During C&F’s early formation, they had rolled up insurance company partners — where they knew the companies and the management — because they were already intimately involved with the target company. Consistent with his expansionist goals, Ridgway was looking further afield. The first of these strategic acquisitions, in 1961, was Floyd West, a leading Southwestern managing general agency based in Dallas, Texas, led by its energetic president, B.P. “Bobby” Russell. Russell had a hardscrabble start — at least compared to Ridgway. After dropping out of college for financial reasons during the Depression, he went to work for an insurance company in Amarillo, Texas, as a solicitor (or as he called it, “a drummer” — presumably because he was out drumming up business). Three years later, in 1941, he moved to Floyd West. And after 20 years of hustling, Russell was named Mr. West’s successor, right before the sale to C&F. Russell began in a VP role at C&F, responsible for the Texas Regional Department. Then, in 1965, he moved to the Executive Staff in C&F’s New York City headquarters, where he assumed supervision of nationwide production activities for the entire organization. A year later, Bobby Russell was named President of C&F and joined the board of directors. B ill Ridgway got a lot done in his time as CEO. His early campaign to diversify into new products and new regions of the country led to the acquisition of 10 general agencies. He then stepped it up a notch by acquiring two insurance companies: Industrial Indemnity, the top workers’ compensation insurance company in California, and Constitution Reinsurance Company. Net written premium grew from $91 million in 1954 to $466 million in 1969, with fire insurance only representing 20% of the production by 1969.
The reported combined ratio for the 1954–1969 period was up and down, with an average of 101. However, in those early days, C&F’s unusual structure meant that poor underwriting results did not necessarily impact C&F. With a combined ratio of 106, 1965 was the worst underwriting year of Ridgway’s tenure. Even so, in his understated manner, Ridgway described the financial results in C&F’s 1965 annual report as continuing “the satisfactory trend of the past.” That same year C&F also published a separate annual report for the C&F group of companies – in which, Ridgway described the ”unsatisfactory underwriting results for the insurance industry and the C&F Group of Insurance Companies”. This highlights the idea that Ben Graham mentioned in the last chapter that C&F was geared to make money even in a poor underwriting year for the insurance companies they managed. The statement also introduces an idea that “the market” can take the blame for bad underwriting results. Better luck next year, insurance company shareholders!
Introduction of the C&F Annual Report, 1968 showcasing an “ultra modern electronic data processing system”.
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