Dare To Dream

unused leads and then use call centers to contact the prospective points toward earning a trip to the All American convention forcustomers. Any new customers would be passed on to agents for attracting new auto or property households.cross-selling. However, it was still tough sledding in the field as agents Agents were also offered financial assistance to use market- struggled with a recession, the impact of RPM on their customersing initiatives aimed at attracting or recapturing former auto and competitors with more sophisticated pricing. Polices-in-customers, and a promotional campaign offered agents cash and force would continue to plummet in 2009 by 271,000.ABOVE: Agent Larry Thompson, Lake Oswego, Oregon, ABOVE: CEO Jack Salzwedel, Chief Sales Officerwas elected by his peers as the first leader of the Gerry Benusa, Field Relations Vice President JerryAgency Council. Rekowski and EVP Brad Gleason answered ques- tions from members of the Agency Council.AGENCY COUNCIL– Company, she became the driv- solve challenges experienced in theFACE TO FACE WITH ing force to create the Agency field. Information brought back toCOMPANY LEADERS Council at American Family the their states was shared with a following year. Agency Council team of district council representa-The relationship between became a forum for open dialogue tives, who then disseminated it to agents and their company between agents elected by their their colleagues. is based on trust. And that peers and company leaders andrequires open and honest commu- staff, providing an opportunity for The system became a win-winnication. As with any large sales collaboration to increase growth for American Family and itsorganization, effective communi- and customer value. agency force, according to Larrycation is challenging when agents Thompson, an Oregon agent whoare in the field, far from the home Three times a year, Agency was elected the first chair of theoffice with little direct contact Council state representatives would council and was instrumental inwith decision-makers. gather at National Headquarters getting it off the ground. “Having to hear about and provide feed- a forum for agents to communi- Lisa Bacus knew this when she back on company projects that cate and address issues directlyjoined American Family in 2008 impacted their businesses and with our corporate partnersas vice president of marketing. customers. They also brought across the company is invaluable,”Based on her experience with the forward topics and questions they Thompson said. “It has definitelyDealers Council at Ford Motor received from their fellow agents, strengthened the relationship and worked on subcommittees to between corporate and the field.” Dare to Dream | 295

ABOVE: American Family agents Lisa Ashbrook and Larry Eckert, Jr., shown here in 2009, successfully built scratch agencies oninternet leads.MAKING THE PROFIT AND the many divisions that had a role in making the plan work. TooGROWTH PLAN WORK many areas were operating independently, resulting in a lack of ultimate accountability and fruitless finger-pointing when targetsThe company’s Profit & Growth Plan (P&G) is the annual blue- were missed. Bill Westrate acknowledged the lack of coordina-print for achieving important financial targets. For many years, tion and recalled that as homeowners director in the actuarialthe process was driven, if not owned, by the controller divi- division, he and his team made the primary recommendationssion. Through the years, Brent Johnson and Dave Anderson had for the company’s homeowner rates for five years with little inputbuilt a talented team in the controller division — people like from other divisions. “We communicated through cross-func-Dan Schultz, Dean Fiorelli, Doug Stoffels, Dan Kelly and Kari tional pricing committee meetings, but ultimate decisions wereGrasee. Anderson and Johnson managed the P&G Plan, work- still largely top-down,” he said.ing mainly with the CEO, president, executive vice presidents,sales vice presidents and vice presidents of the business lines. To upgrade the company’s product management capabil- ities, the senior leadership team (SLT) created a new product But Anderson had long believed that process had serious lines territory (PLT) division, granted responsibility for creatingflaws. Most officers had no input into the plan. He saw insuffi- the P&G Plan, including sales goals and initiatives to achievecient communication and cooperation across the company among296 | Forward, Despite the Great Recession

PROTECTING DREAMS IN A CONNECTED WORLDIn 1927, the movie industry encourage customers to become For property insurance, was transformed by “The Jazz safer drivers. American Family was among the Singer,” marking a shift from industry leaders to explore the silent films to “talkies.” Similarly, The company’s first UBI prod- connection between insurance shifting technology transformed uct — mySafetyValet — rolled and the emerging field of home the insurance industry over the out in May 2013. Customers automation. The company wanted past 90 years. signed up to install a small device to work with customers and home American Family recognized in their vehicle that recorded automation startups to reduce risk early the importance of adapt- driver behavior. They received in the home. ing and leading the industry in a discounts based on how much, connected world. In late 2009, the when and how they drove. In In 2015, the company began company took its first step into the 2017, the program was renamed providing discounts to customers connected car and home space, KnowYourDrive. who installed smart home devices researching usage-based insur- that proactively helped detect, ance (UBI) options for its auto American Family continued and remotely alert them of, poten- products. UBI technology tracked researching ways to evolve its tradi- tial covered losses. driving behavior such as miles tional auto insurance product for driven, acceleration and hard brak- the eventual sale of autonomous Beyond protecting their custom- ing. Insurance companies could vehicles, and executed a product ers most valuable possessions, use this information to better align roadmap designed to enable the entering the connected market- premiums with individual risk and company to adjust product offer- place allowed American Family to ings as technology and customer provide customers peace of mind preference shift over time. whether at home or on the road. Dare to Dream | 297

them. PLT would clarify which because they traditionally had a free rein and responsibility for meeting sales targets in their states. “Some veteran sales direc- areas of the company were respon- tors knew who to see and where to go inside the company to get things done for their states, and they were worried they couldn’t sible for certain aspects of the plan. do that anymore,” Benusa said. But there was a limit: The business Some of those field concerns were mitigated a bit with John Thedinga’s appointment as PLT vice president. A veteran lines retained ultimate accountabil- sales director himself, he had just settled in Columbus, Ohio, to assume leadership of the Valley sales region, but then moved to ity for meeting their production Madison to lead PLT when the company consolidated five sales regions to three — East, Central and West.Thedinga realized he and profit goals. All officers would lacked experience running what was, in reality, a product manage- ment division. He hired outside consultants and experienced participate in meetings as the plan John Thedinga was created, with quarterly P&G meetings to discuss its implemen- tation and performance. Gerry Benusa, new to his sales executive vice president role, remembered some state sales directors being alarmed about PLT BELOW: The Personal Lines Business Review group met monthly to discuss Personal Lines results as part of the Strategic Busi- ness Unit (SBU) process. Pictured: 1. Jackie Quinn, regional operations director; 2. Kelly Lien, product management VP; 3. Mary Schmoeger, president, personal lines; 4. Cristy Lee, integrated business planning director; 5. Jennifer Niles, pricing AVP; 6. Ann Elkins, operations AVP; 7. Scott Little, line of business AVP; 8. John Kluesner, central services AVP; 9. Paul Choi, national product director; 10. Charity Vickers, HR advisor; 11. David Johnson, national product management AVP; 12. Tim Mosley, regional product AVP; 13. Wendy Scheper, corporate programs director; 14. Jim Maastricht, shared services AVP; 15. Phil Thompson, business per- formance director; 16. Sarah Barman, communications consultant; 17. Angela Himegarner, line of business AVP; 18. Marc Cas- tellucci, claims VP; 19. Don Johnson, line of business AVP; 20. Jim Kutz, sales performance & development director; 21. Stuart Rogers, product & field marketing director; 22. Austin Caves, regional product AVP; 23. Janet Dettmann, regional product AVP; 24. Chris Eason, financial planning & analysis AVP. 16 17 18 19 20 21 22 15 8 9 11 12 23 614 5 7 10 24 1 2 3 4 13 298 | Forward, Despite the Great Recession

ABOVE: Early on in the company’s history, American Family’s profit and growth plan was not widely communicated to agents andemployees. But Dave Anderson and his CEO successors decided everyone in the organization should know the basics of the plan,so they could help achieve its goals. Dan Kelly, chief financial officer, explained the plan during a town hall meeting in 2016.people from other insurance companies, quickly developing a privately pleading and persuading officers to follow through onnew approach for American Family. their commitments or make necessary changes in programs or PLT created strategic business units (SBUs) for each salesstate, bringing together all the key players, including sales people. And at officer meetings, even though the business linesmanagement, the lines, marketing, claims, actuarial and othersas necessary. For the first time, the players all sat down at the retained ultimate responsibility for achieving their productionsame table at the same time to discuss and debate what needed tobe done and who was responsible. The SBUs created viable state targets, Thedinga was under the gun with tough questions aboutoperational plans and met regularly to make adjustments. Thiswas a big change from the previous “one size fits all” approach to why certain aspects of the plan weren’t working. “I had to useoperational planning. the word ‘we’ a lot and not throw another vice president under Benusa watched the process have an immediate impact. Helater recalled,“There was more honest discussion and fewer people the bus,” he said.and divisions acting in silos, with a focus on sharing resources andsolving problems.” A PLT planning and performance department When the West regional sales vice president position openedled by Mary Theilen consolidated the reporting and analysis ofprofit and growth results, tasks formerly performed by each prod- up,Thedinga jumped at the chance touct line and marketing. return to the field. He was succeeded Thedinga was pleased that the P&G process was workingbetter. But he was often frustrated, spending much of his time by Mario Menesse. The strategic leadership team changed the divi- sion’s name to Product Management, better reflecting its function and gave the division ultimate account- ability for the plan results. Menesse soon left the company and was succeeded by Kelly Lien, a product management veteran. Kelly Lien Dare to Dream | 299

ABOVE: President Jack Salzwedel criss-crossed the company’s operating territory to reassure employees and agents during the tougheconomic times following the stock market crash. He’s shown here talking with employees in Phoenix during a town hall meeting.EXPENSE MANAGEMENT end 2009 with fewer workers than we have today.” And that’sMOVES INTO HIGH GEAR what happened: 326 fewer employees, as well as fewer contin- gent workers; the company had cut 160 I/S contractors in lateTough budgeting decisions continued as the company lowered 2008 and another 83 in 2009. The goal was to reduce the work-expenses. “It really was a premium challenge as much as an force primarily through attrition, but some layoffs were inevitable.expense challenge,” said Gerry Benusa. The expense ratio hadrisen primarily because of flat premium growth and additions to This new era was unsettling to many longtime employ-the employee ranks to service all those new customers gained in ees who, during their careers, had never experienced expenseyears past. And expenses were higher because of costly invest- management to this degree. In their minds, expenses had neverments in RPM, the Reinventing Claims initiative, ILP and been a serious problem at the company. Salzwedel and otherincreased advertising. “We knew it would impact our expense executives took to the road once again for town hall meetings,ratio,” said Dave Anderson, “but we bit that off and made critical listening to concerns and answering criticism. Some employeesdecisions to invest in our future because we had some great years wondered why the company couldn’t simply dip into equity toearlier in the decade and knew we had the money to invest.” But cover expenses, but Salzwedel reminded them that wouldn’t workno matter the reasons, expenses had to be reduced. long term because “it would be like tapping into your emergency fund to pay for your regular daily costs.” Others had harsh criti- Leaders were transparent about their plans to carefully review cism for the company’s new corporate jet. Leadership respondedall operations and expenses, acknowledging it would mean cuts in by saying the aircraft would be used only for strategic businessprograms and people. Dan Kelly, human resources vice president, travel with priority for a catastrophe response team, companytold employees, “The simple fact is, through this process, we’ll300 | Forward, Despite the Great Recession

leaders or groups of employees traveling toregional offices.The claims division had a major roleto play in expense reduction because it hadthe most employees. Tim Constien, claimsvice president, understood the ReinventingClaims initiative had reached a fundamen-tal conclusion: Technology advancements,process improvements and a change inclaim frequency patterns were all makingit possible for American Family to provideexcellent claim service with fewer bricks-and-mortar locations.Traditional claims handling in officesscattered across the operating territorywas changing. The claim customer carecenters were now handling the immedi-ate needs of customers and often settlingless complex claims. Technology allowedelectronic sharing of files among offices,meaning excellent claim service couldbe provided customers from anywhere.As a result, claim operations in JeffersonCity, Missouri, Rochester and St. Cloud,Minnesota, Schaumburg, Illinois, Topeka,Kansas and Tucson, Arizona, were closed.The moves impacted 199 desk claimemployees but only 105 positions wereavailable in other offices. That meant 94people, plus another 33 support person-nel, lost their jobs. This was new territoryfor everyone, and anxiety increased amongmany employees. Constien and his leader- ABOVE: Claims education remained an important priority during the Reinvent-ship team met personally with employeesto tell them their offices were closing. ing Claims initiative. The company’s claim education facility provided hands-on training for adjusters to learn how to inspect damaged vehicles and buildings. Senior management also put tighterconstraints on technology spending, afterbig-dollar projects like ILP impacted theexpense ratio. Salzwedel realized it was aCatch-22 situation because “We can’t do much around here with- and managers to present detailed reasons for their requests without I/S hours, but we also can’t spend beyond our means.” As a follow-up questions and answers. It soon became clear thereresult, I/S capacity was reduced to 2008 spending levels.Training were no free passes. Gradually, hiring managers began to self-po-and travel budgets dropped company-wide. lice their employee requests, carefully analyzing need and oftenHuman Resources Vice President Kelly established a choosing not to seek additions or replacements. In the end, theCritical Positions Team (CPT) of officers to review every single CPT approach was a remarkable success. Combined with exten-request to replace or add an employee. CPT became a power- sive divisional reorganizations across the company, employeeful tool to reduce employee numbers, requiring officers, directors numbers dropped from 8,518 in 2007 to 7,390 six years later. Dare to Dream | 301

ABOVE: Employees and agents in St. Joseph, Missouri, collected 1,843 tons of food forSecond Harvest and raised more than $10,000 in contributions from 2009 into 2010. Some areas, however, remained untouchable for expense 1980 and 1996 — were less attached to organizations andcuts. The senior leadership team quickly determined American companies, tending to move from employer to employer.Family would modify but continue its generous pension and 401kprograms for employees, one of the few companies in the nation With changing employee attitudes, combined with theto offer dual retirement programs. And, the popular Corporate economic turmoil and internal cost management, it became moreIncentive Program was continuously strengthened to match important than ever to keep all of American Family’s employ-incentives to goals. Retention of these key benefits eventually ees engaged. Kelly knew Salzwedel wanted to create an internalhelped calm fears among the employee ranks. culture that increased employee trust and empowerment. And Kelly knew that “what kept employees engaged 10 or 20 years agoENGAGING EMPLOYEES is not necessarily what will keep employees engaged today.” Both believed research that said organizations with high employeeSince its founding in 1927, American Family had always taken engagement significantly outperform their competition.pride in being a good employer, and many individuals spenttheir entire career at the company. However, times were chang- The company had begun surveying employees in 2002, anding. Gallup surveys showed Millennials — people born between gradually improved the surveys through the years with intense bottom-up focus group research into what factors employees considered important to stay engaged. By 2006, 100-question surveys measured employee commitment, manager-employee302 | Forward, Despite the Great Recession

communication, manager effectiveness,pride in the employee’s job, an employee’sview that his/her opinion “counts,” andintent to stay with the company, amongother topics. Similar survey questionswent to agents as well.In 2009, Kelly described surveyresults as positive overall. “We’re proudto be a good place to work in compari-son to our peers. Our next step is to be agreat place to work compared to the bestof the best.” His team moved to shortersurveys to keep close tabs on the pulse ofthe organization.The engagement surveys continued,using the Gallup organization.The dozenGallup questions were straight to the ABOVE: Human Resources Vice President Dan Kelly kept close tabs on the pulse ofpoint: Does the employee know what’sexpected of him? Does the employee employees and insisted managers respond to employee sentiments and concerns in the engagement surveys.believe her supervisor or someone at workcares about her? Does the employee havea best friend at work? Do the employ-ee’s opinions count? Has the supervisor talked to the employee leadership skills, such as communication practices or recognizingabout his progress? individual accomplishments. The survey results fostered regu-The answers to each of the survey questions were regu- lar face-to-face meetings with individual employees, creating alarly reviewed by all levels of management. Individual managers continuous conversation resulting in fewer surprises and moreand directors could respond to employee concerns about their immediate response to issues and concerns. Dare to Dream | 303

In 2010, American Family’s marketing objective was to “drive growth through aware-ness and action.” The advertising team created this intriguing visual message in Denverto grab attention and generate buzz.

I find my greatest pleasure, and so my reward, in the work that precedes what the world calls success. — THOMAS EDISON, American inventor15 ADVANCING INTO HIGH GEAR

CHAPTER 15 | ADVANCING INTO HIGH GEARIn August 2009, the company announced Advance, the biggest and most important strategic initiative in its history. Though most employees and agents couldn’t appreciate its critical nature at the time, senior leaders were convinced it wasessential for the company’s long-term survival. do business and the technology we use across multiple areas of Advance would implement the technological systems needed our business,” said Kristin Kirkconnell, the company’s senior vice president of I/S. “It will pave the way for American Family toto transform how the company did business.The incredibly complex respond more quickly to industry trends and better meet theand costly initiative would include improved products and support needs of our customers.”the entire sales and policy-servicing process, from quote and appli-cation to underwriting, pricing, issuing and billing. It would also An initial major component of Advance was the Policy andhelp build data management and business intelligence competence. Billing Center (PBC), a system for personal lines and commercial/ farm-ranch purchased from insurance software vendor Guidewire. The company’s senior leadership team (SLT) had concluded The system would support the entire sales and policy servicethe project was essential to improve efficiency, effectiveness and process from quote and application to underwriting and issuingspeed-to-market. “Advance will help us transform the way we306 | Advancing Into High Gear

a policy, including more customer self-service options. It would “our company’s historical tendency to announce something andenable the company to develop more sophisticated pricing, build- immediately declare victory.”ing on the RPM strategy. Kirkconnell said PBC would includenew systems to support new auto and property products, as well Within weeks, I/S and Personal Lines were planning theas simply processing new business and renewals more efficiently. scope and degree of the initiative. One particularly crucial deci- sion happened during an impromptu gathering of key players. Despite the promised magnitude of Advance, the field Kirkconnell and Personal Lines Vice President Westrate set upforce reacted quietly to the announcement, having heard other an after-hours evening meeting, inviting Julie Rupert, personalbig plans before.The agents’ wait-and-see attitude didn’t surprise lines director, Justin Cruz, actuarial vice president, Advance direc-CEO Dave Anderson, who thought it probably resulted from tor Greg Pfluger and other key directors from their teams. “AtBELOW: At an impromptu, after-hours meeting, several officers made a critical decision to expand the scope of the Advance initia-tive to create new products and pricing. They included Justin Cruz, actuarial vice president; Kristin Kirkconnell, senior vice pres-ident, I/S; Bill Westrate, personal lines vice president; Julie Rupert, personal lines director; and Greg Pfluger, lead project direc-tor for Advance. Dare to Dream | 307

ABOVE: In 2010, the company unveiled a new catastrophe response vehicle. Standing (left to right) are: James Reetz, CarsonReuter, Janet Gleissner, Monica Gengler, Ralph Turner, Bryan Lang, Charles (Chip) McAleer, Susan Dangelo, Wendy Scheper, TerriMcCormick, Dave Verstegan, Bill Moody, Tom Williams and Tracy Groth.that meeting, we committed that the new systems would be American Family’s board of directors was concerned but didimplemented with entirely new products and pricing models,” not interfere with executive management, expressing confidencesaid Westrate in the leadership team. Most board members understood the major factors, primarily the economy, the lag in pricing sophis-THE DEEP RECESSION LUMBERS ON tication and the need for Advance, “so they gave us rope to do what we needed to do,” said President Jack Salzwedel. OneAgents and property casualty insurers continued to suffer board member, Londa Dewey, told him the board was support-through the country’s long, slow recovery from the 2008 finan- ive because Anderson and Salzwedel “had consistently told uscial meltdown. Most insurance companies saw drops in revenue what you wanted to do, and then did it.”and policy count for a third consecutive year. By the end of 2010,American Family had lost another 332,000 policies during the The only insurance companies that grew in 2010 wereyear, the equivalent of losing an entire sales state. those with a different business model, primarily direct sales, or companies like State Farm that priced business at a loss to hold market share. “We’re not going to chase business at a loss,” said308 | Advancing Into High Gear

Anderson, and “will instead continue to invest in initiatives that and established a corporate YouTube channel to reach customers.build success, like property profitability, Integrated Channels and Derek Parker, then an agent in Glendale, Wisconsin, wasAdvance.” Salzwedel, Executive Vice President Gerry Benusa andsales leaders continued to spend much of their time bucking up comfortable with Facebook because it was introduced during hisagent morale in the face of slow sales. freshman year in college and he quickly started generating sales. “In the old days, an agent would pound the pavement for newPOUNDING THE VIRTUAL PAVEMENT business,” he said. “I do the same thing today, but it’s a virtual pavement and a whole lot easier.” The policy sales and serviceThe company rolled out significant changes to complement call center continued to sell auto insurance to new and existing customers and provided assistance to customers who wanted toAmerican Family’s traditional agency-based business model to verify coverage or add vehicles. Like any large operation with multiple call centers, the challenge was always standardizationhelp boost growth and raise customer satisfaction in 2010. Led and consistency of service.by Customer Service Touchpoints Vice President Pam Stampen Sales management fully supported all the new digital developments. “The planned result, of course, is to bring in newand Marketing Vice President Lisa Bacus, teams continued to households with an auto policy, then the assigned agent can beginimprove 24/7 policy sales and service and billing call centers, BELOW: As the company offered customers digital options, itrefresh technology and integrate new channels with agent offices. almost always provided agents opportunities for follow-up contact.On Feb. 16, 2010, American Family made its first onlineauto insurance sale. Within 15 minutes of receiving an emailconfirmation, a Georgia agent called the customer back and left a message thanking her for the business and set up a meeting to ensure she had received all appro- priate discounts. They met and the customer bought a renters policy as well. All states had online insur- ance sales capabilities a year later. Bacus had pushed hard for the option, noting, “Our new online application equals or exceeds theBill Simon capabilities of our competitors, meeting the needs of customerstoday.” She continued to press for improvements, eventuallystreamlining the quote and bind process andreducing the number of screens and hardstops encountered by potential policyhold-ers. Digital Marketing Director Bill Simonled most of marketing’s online sales proj-ects and his teams continually worked tosimplify and improve the online quot-ing process.In another technical develop-ment, customers could now alsouse their smart phones to fileclaims, pay bills and check theiraccounts. Simon led teamsencouraging agents to set uptheir own Facebook pages Dare to Dream | 309

THE RISE OF SOCIAL MEDIAThe advent of social media relevant and engag- LinkedIn, a brought new opportuni- ing content,” said personal blog ties to consumers — and to Michele Wingate, and a podcastingAmerican Family, its agents and corporate channel to share his ideas andemployees. After establishing an communica- make deeper connections with aactive web presence in the late tions direc- variety of audiences.1990s, the company expanded tor. “Socialto social media. In mid-2009, the media is an authen- Once considered a fad bycompany launched an American tic place for our company, many, social media becameFamily Facebook page to connect our agents and our employ- engrained in the everyday activi-with current and prospective ees to talk with people about our ties of customers, employees andcustomers. Thousands of agents brand.” Wingate, Tom Buchheim, agents. American Family contin-were quickly trained and encour- Josh Feyen, Keith Katers, Seth ued to evolve its approach toaged to use social media to grow Keeler and Collin Kromke were social media as consumer pref-their businesses. key players in launching and erences — and the social media growing the company’s social platforms themselves — change. The digital marketing team media presence.soon created a pioneering inter- Pictured (from left to right frontactive game, social media appli- Inspiration for the growth and row): Keith Katers, Collin Kromke,cations and online partnerships direction of American Family’s Michelle Wingate, Josh Feyen;that connected American Family’s social media strategy often came (back row): Tom Buchheim, Sethbrand to consumers. As more from the company’s biggest Keeler.people flocked to new and differ- social media advocate — CEOent social media platforms, the Jack Salzwedel, an early pioneercompany’s brand created new among executives who use socialcommunities on emerging sites media. Named most engaged andsuch as YouTube, Twitter, Google most active CEO on Twitter inPlus, and Instagram. American consecutive years by CEO.com,Family was the first insurance Salzwedel stressed the value ofcompany on Pinterest, and its social media — for the brand,agent social media program agents and employees. Hisbecame one of the most active primary channel was Twitter —in the industry. The company’s where he was found atinnovative social media market- @AmFamJack. But heing campaigns won accolades and also usedseveral awards from digital indus-try leaders. “Throughout the historyof our social mediaprogram, AmericanFamily has alwayshad a desire to buildlong-term relation-ships with custom-ers — doingso with310 | Advancing Into High Gear

to build relationships, do personalinsurance reviews, introduce thesecustomers to our other lines andinsurance products, and really lever-age our multi-line sales and serviceadvantage,” said Rich Steffen, EastRegion sales vice president.In addition to the push to reachcustomers in a variety of new ways,the company was also examiningother aspects of the business thatneeded improvement. Property prof-itability remained a perennial priority.Chief Financial Officer Dan Schultzbelieved it was a critical issue. “Weknew we had to fix our property ABOVE: President and Chief Operating Officer Jack Salzwedel meets with audienceproduct through Advance,” he said,“because our projections showed we members after a Denver town hall meeting.really couldn’t afford to expand intonew states or make acquisitionsunless we got our homeowners lossesunder control.” As Personal Lines Vice President, before becom- been chief information officer at Sentry Insurance, where heing EVP, Bill Westrate announced the company would take a replaced Sentry’s policy and billing systems using Guidewirecloser look at every one of its 1.75 million property policies. The software, the same vendor selected by Kirkconnell. Pflugercompany hired a vendor to conduct 350,000 surveys annually. didn’t blink at the gargantuan challenge of creating new process-Underwriters reviewed the surveys to identify loss-control ing systems while simultaneouslyissues, hazards and roof concerns, while also verifying homes were implementing new insuranceinsured for their full value.The goal was to reduce the likelihood of products, even though he knewclaims caused by the condition of the property and help ensure the other insurers had failed trying tocompany received the accurate amount of premium for each risk. do the same thing. He brought experience and instant credibility, telling lead-HUNDREDS OF MILLIONS FOR ADVANCE ers and his teams that “we need a high-quality system with theThe Advance project moved into high gear in 2010, with the initial release, but we can’t afford Greg Pflugerstrategic leadership team committing “hundreds of millions of the time to build the perfectdollars” to dramatically improve the company’s technology capa- system right away. The first release won’t be perfect and therebility. Salzwedel said it was the organization’s top priority because will be changes that need to be addressed in subsequent releases.”outdated products and policy processing systems were imped- His steady, competent leadership played a major role in makinging American Family’s ability to compete. “When the first phase Advance a reality.of Advance is complete,” Salzwedel told agents, “we will gain theflexibility to build and support competitively priced products tomeet customer needs, allowing the company to grow profitably.” ‘WE’RE IN THE MUDDY MIDDLE’Most agents continued a wait-and-see attitude because it was stilldifficult to grasp the magnitude and promise of the project. The constant barrage of new initiatives and activity were start-Kirkconnell had made a key hire early on, bringing in Greg ing to take a real toll among the troops. Many employees andPfluger as chief architect of the Advance initiative. Pfluger had agents had never before experienced the amount and pace of Dare to Dream | 311

SPORTS MARKETING DRAWS FANS ACROSS THE COUNTRYBy its 90th year, American public relations vice president, Soon, the AmFam logo was Family became a major partnered with the University featured on basketball posts and player in the sports market- of Wisconsin-Madison athletic hockey sideboards in the new ing world. The company linked its department to purchase 80,000 Kohl Center, and later on netting brand with the power of sports towels featuring the American between the goalposts in Camp stars and teams, building rela- Family and Wisconsin logos for tionships with their passion- Badger football fans attending the Tom Pietras ate fans. The company’s created Nov. 13, 1999 game against Iowa. partnerships to feature some of As expected, Wisconsin running America’s top athletes as brand back Ron Dayne broke the all-time ambassadors and the American NCAA rushing record held by Family logo became prominent on Ricky Williams, ensuring he’d win fields and scoreboards, sponsor- the Heisman Trophy. It was an ships and events and even some electric, emotional scene as every bold stadium entry gates. fan in Camp Randall Stadium held up a towel with Dayne’s number The company’s sports market- (and the AmFam logo) at the end ing efforts had a humble begin- of the game in tribute. ning. In 1999, Rick Fetherston,BELOW: Fans attending the 1999 Wisconsin-Iowa Big Ten football game held up towels with Ron Dayne’s numberand the American Family logo after Dayne set the all-time NCAA rushing record.312 | Advancing Into High Gear

Randall Stadium for field goals In 2006, American more pink capsand extra points. The costs were Family and the Green that season than all the hatsadding up in the PR budget, Bay Packers held they had sold after their lasthowever, so Fetherston went the most success- Super Bowl.” The NFL took noticeto Marketing for help. He found ful charitable fund- and began a popular “Crucialeager allies in then-Market- raiser in NFL history. Catch” annual campaign in 2009ing Vice President Gerry Benusa It had all the compo- promoting breast cancer aware-and Tom Pietras, a new market- nents of success: a worthy ness and fundraising, with playersing events specialist who readily cause, corporate teammates dedi- wearing pink cleats and carryingagreed to manage the programs cated to making a difference pink towels.and pay most of the bills. Pietras and a neat-looking pink cap. Theled the company’s sports market- Faith, Love and Hope campaigning for the next decade. His team raised more than $1 million fordeveloped relationships with the breast cancer research throughNational Football League, Major the sale of 210,000 caps withLeague Baseball, the National the AmFam and Packer logos.Basketball Association as well as Pietras remembered the Packersseveral college teams. were astounded because “we soldBELOW LEFT: Sponsorship of the nationally televised U.S. Army All-American Bowl provided brand awareness.BELOW RIGHT: Some enthusiastic Atlanta United soccer fans wore team jerseys featuring the American Family logo. Dare to Dream | 313

Even as the company initiated significant changes to improveproducts and pricing, the critical day-to-day process of fastand fair claims settlement continued. Agent Jeff Bieber (left)met with customer Howard Wishner, whose home was one of169 destroyed in the 2010 wildfires that began on Labor Dayin the foothills of Boulder, Colo.314 | Advancing Into High Gear

change at American Family. Some were angry about expense the company’s financial strength and its ability to meet its obli-management and layoffs. Others were frustrated that neces- gations to policyholders. Salzwedel acknowledged there weresary technology improvements in their areas were delayed or lots of balls in the air and said, “We’re in the muddy middle ofcanceled because Advance took priority. Many were concerned change. We’re knee-deep in critical projects that execute our stra-about the company’s continuing decline in policies and reve- tegic plan. This is where the work gets hard. This is where we runnue. And that “negative outlook” comment that A.M. Best into implementation challenges. It takes real commitment to stayattached to the company’s A rating the year before continued focused on our projects, goals and plan.” He didn’t want to beto worry agents. like other companies that started tough-to-execute projects and then gave up and moved on to the next shiny ball. “We will stay Salzwedel and other executives continued their by-now focused,” he promised.regular efforts to meet people face-to-face at town halls, stressingBELOW: The company invited employees with 40 years of service to join the Sporty 40 Club to recognize their achievement. EvelynBerger (left), administrative services coordinator in Eden Prairie, reached the 50-year mark in 2007, the longest-tenured employeethat year. Sharon Mercier also reached the half century mark of service, retiring in 2016 in her 50th year as an employee. Dare to Dream | 315



The future belongs to those who believe in the beauty of their dreams. — E LEANOR ROOSEVELT16 WRITING OUR OWN RULES, CHARTING OUR OWN COURSE

CHAPTER 16 | WRITING OUR OWN RULES, CHARTING OUR OWN COURSEJack Salzwedel believed in “defining moments,” those times in a company’s history when critical decisions make the difference between success and failure. “They are a point in time for a company when the way of doing things isn’t working or rele-vant — and the recognition that change or transformation is underdog, putting a chip on our shoulders that motivates us torequired.” achieve our goals. We’re bound to become complacent otherwise.” Many weren’t quite sure exactly how Salzwedel would chart a One of his defining moments came at an industry meeting different course, but they would soon find out.he attended in 2011. He listened to a speaker talk about playersin the insurance industry, casually referring to American Family BELOW: Jack Salzwedel selected CFO Dan Schultz as his suc-as a “runt” in the business. Salzwedel didn’t appreciate the refer-ence, but as he thought about it, he had what he later described cessor as president, valuing his financial background andas an “a-ha moment.” Schultz’s view that the company faced significant change. As he sat in the meeting, thinking about the property casu-alty insurance business, Salzwedel realized “chasing marketleaders can be an endless cycle of competitive intelligence, newprojects to address where they’re headed and ultimately gettingthere, only to see they’ve moved ahead again.” He didn’t thinkplaying catch-up would work long term. “I decided then andthere that we would chart a different course. Instead of trying tobeat the competition at their games, why not play by our rules andcreate a new set of companies by which to compare ourselves? Idecided to win our way.” He thought it was a lot like the Biblicalstory of David beating Goliath “because he didn’t fight the gianton his terms.” Salzwedel began to share his thoughts with people acrossthe organization, telling agents and employees that in additionto changing the rules of the game, “We must always act like an318 | Writing Our Own Rules, Charting Our Own Course

ABOVE: Throughout his career, Jack Salzwedel made it a point to interact face-to-face with customers. After a tornado struckWadena, Minnesota in 2010, he inspected the company’s catastrophe response operation and handed a check to policyholderAnita Trana as they stood in the ruins of her home.BREAKING TRADITION First, Salzwedel thought others on his list of potential succes-WITH A NEW PRESIDENT sors needed more executive experience. More important, over the years, he and Schultz had forged a close friendship and success-Early in 2011, the board of directors had made it official: ful working relationship. Both had been elected officers about theSalzwedel would become CEO on November 1 when Dave same time more than a decade earlier. When Salzwedel took overAnderson retired. Salzwedel gained the board’s approval to personal lines, Schultz, then the new controller, told him, “You’rename Chief Financial Officer Dan Schultz as chief operating now running 80 percent of the company, and I’m here to help.”officer in May, adding the president’s title when Anderson leftin November. It was surprising to many employees and agents, Salzwedel vividly remembered an early conversation withbecause Schultz would retire in a few years while Salzwedel was Schultz on an airplane ride to meet reinsurers. “Dan and I pledgedstill CEO, so that unlike the past, Schultz would not eventually to each other that if we ever had a chance to run the company, webecome CEO himself. But it was no surprise at all among the would act decisively,” said Salzwedel. “If we saw a problem, weboard of directors and officers who had worked closely with him. would address it. We might miss things, but if we saw issues, weSchultz had been a key player in the profit and growth plan, stra- wouldn’t just let them be.” Salzwedel was frustrated that sometegic planning and risk management for years. And he was the officers were “just letting things happen without addressingright person at the right time. issues.” The future CEO and president made a pact: “Our sins Dare to Dream | 319

would be sins of action, not sins of inaction!”In looking back, Salzwedel remembered “Itwas the first time that I actually realized Ihad a legitimate chance to become presi-dent or CEO.” Outgoing CEO Dave Anderson wascompletely supportive of Schultz’s promotion,having hired him decades before, and havingwatched him gain a thorough knowledge ofthe company’s operations and finances, even-tually serving as chief financial officer.BUILDING HIS TEAMMid-year in 2011, Salzwedel selected hisown senior leadership team even before he ABOVE: At the 2011 Executive Briefing for officers and directors, the com-took over the CEO reins on November 1.Dan Kelly succeeded Schultz as CFO, pany’s new top leaders shared their vision to expand the company in aPersonal Lines Vice President Bill Westrate fast-changing marketplace. They stressed constantly improving the cus- tomer experience remained a top priority.was named executive vice president tocontinue his role as chief architect of newproduct design; Marketing Vice President “WE HAVE TO GET SCALE.”Lisa Bacus moved up to executive vice president, focus-ing her marketing experience on product packaging, and Rick As CFO, Schultz had watched the company’s expense ratioFetherston joined the senior leadership team as senior vice pres- climb because policy counts and premium were going backward.ident of communications. Jerry Rekowski became chief business “We were healthy, financially,” he recalled, “but we wouldn’t beintegration officer, charged with taking a big-picture view of in the long run if things didn’t change.” Growth was a criti-Advance implementation to ensure divisions worked effectively cal priority.together. They joined Executive Vice Presidents Mark Afable, Continuing long discussions started a year earlier, SalzwedelGerry Benusa, Brad Gleason and Mary Schmoeger, as well and Schultz concluded American Family had to develop an alter-as Chief Legal Officer Dave Holman and Chief Information native digital platform for sales. “We knew we had to get scale,”Officer Kristin Kirkconnell. Peter Gunder joined the team as an said Salzwedel. “We wanted to go national but couldn’t go intoexecutive vice president and chief investment officer. 31 states with our traditional agency model, so we knew we hadDan Kelly Bill Westrate Lisa Bacus Rick Fetherston Jerry Rekowski320 | Writing Our Own Rules, Charting Our Own Course

to use a different business model, probablydirect.”They quietly started looking at directcompanies for possible acquisition.They talked about options. Should thecompany enter new states with a directmodel and later backfill with agents? ShouldAmerican Family start a direct model withan entirely different brand in every state?Salzwedel and Schultz had raised theprospect of buying a digital insurer withAnderson, noting that Farmers Insurance hadpurchased 21st Century Insurance. Andersonwasn’t enthusiastic about the idea because hefelt it was too close to the end of his tenureas CEO; he didn’t want to approve such amajor move knowing he wouldn’t be aroundto see it succeed or fail. “I also was worried ABOVE: As the company’s new president, Dan Schultz was passionate aboutabout how we would sell this to agents, andI thought that if we ever did pursue digi- American Family becoming “nearly national” and took his message to agenttal insurance, we should consider building it and employee town halls.rather than buying another company,” he said.Salzwedel and Schultz realized theycouldn’t go down that road until afterAnderson retired. This frustrated Salzwedel. In May 2011, policy growth and concentration in the Midwest — areas withSchultz and Fetherston were meeting in Schultz’s office. Visibly the highest risk of wind/hail storms and past financial losses. Heupset, Salzwedel entered the room and told them digital believed a national footprint would allow the company to useinsurer Esurance was no longer available becauseAllstate had just plunked down a billion dollarsto buy it. “Damn!” he said, pounding the deskwith his fist, irritated that American Familywasn’t yet in the game.GOING ‘NEARLY NATIONAL’ ABOVE: By 2011, with American Family agents serving custom-Schultz was spending his first months as ers in 19 states, President Dan Schultz announced a “nearlypresident crafting his “five-year vision” for national” goal that would likely include additional channelsAmerican Family. He believed employees and to reach new customers.agents wanted “a clear idea of where we were head-ing.” That vision articulated the company’s challenges— Advance, growth, expense management and a changingculture — as well as the opportunities — growing into a “nearlynational” company with strong customer satisfaction. Schultz was passionate about going “nearly national.” Hiswork as CFO determining the actual capital strength of theenterprise had given senior leaders a better understanding thatthe company’s capital requirements were primarily driven by its Dare to Dream | 321

its capital more efficiently because geographic expansion would could develop a direct brand, we can have a hybrid between directdiversify risk. and agents, we can go into certain states with an agency force if we wanted.” But he always reminded everyone in the organiza- Salzwedel credits Schultz for “ushering in the ‘nearly national’ tion to “nurture the mainstream,” the agents who were the coreconcept, which was critical to the organization’s overall under- of the business bringing in the vast majority of the company’sstanding that we would have to do things differently than we had revenue. He also constantly reassured agents that “It’s not anin the past.” Through town hall meetings, webcasts and Compass either-or-proposition; our business model will continue to evolvemessages, Schultz outlined his vision that American Family had including agents, the internet, call centers, social media and more,to become a ‘nearly national’ enterprise. The future — eventu- all integrated so we can grow.”ally including the acquisition of direct companies — “becameeasy to talk about,” said Salzwedel, “because Dan effectively Given the continuing drop in revenue and policy count,explained it so that the strategy execution made sense to employ- growth was critical. Salzwedel knew the company couldn’t waitees and agents.” until Advance provided new products, pricing and systems. The 2011 profit and growth plan projected an increase in new busi- Salzwedel was upfront with employees and agents: “We have ness applications, and sales management was confident that aa great opportunity to grow because we’re not in all 50 states. coordinated package of initiatives would work. They includedAnd we could do anything we want in those other states — weBELOW: In 2011, the company held its first National Business Owners Conference (NBOC) in Las Vegas. Paying their own travel and lodging expenses, 1,200 agents chose to spend three days away from their offices to learn strategies and tools to grow their agencies.322 | Writing Our Own Rules, Charting Our Own Course

creative direct mail and internet lead programs, new discounts, THE DREAMS CAMPAIGN DEBUTStargeted rate decreases, adding agents in growing markets andonline quote-and-bind in all operating states. Mid-year 2011, American Family unveiled a new, bold advertis- ing/branding campaign — Dreams — that would prove to be The SBUs—strategic business units—in each state were one of the most successful in the industry’s history. It was theproving their value. In Minnesota, for example, business perfor- brainchild of Marketing Vice President Lisa Bacus, Advertisingmance consultant Nate Collins and his team implemented Director Telisa Yancy and Brand Strategy Manager Sarah Pettit.territorial segmentation, increasing 22 rating territories to 94. The three were assisted by Erika Mundinger, lead researcher forThat allowed the company to offer more accurate rates to indi- the project. They were determined to create a new brand plat-vidual risks to drive new business sales. form for American Family in a highly competitive marketplace. “Competitors were spending huge sums on advertising,”said Pettit, The company held its first National Business Owners “and we knew we couldn’t out-shout them with advertising alone.”Conference (NBOC) in Las Vegas in April. More than The trio reviewed competitors’ advertisements featuring actors,1,200 agents paid their own expenses for the three-day event, animals or cartoonish characters pitching their brands. GEICOwhich offered presentations and seminars on topics including had the gecko, AFLAC had the duck, Allstate and Farmerssales techniques, staffing, technology, taxes, time manage- featured actors. They wanted to go in a different direction.ment and more. Dare to Dream | 323

AMERICAN DREAMS DON’T COME EASY.THEY’RE GOING TO MAKE YOU WORK FOR IT.SO PUT ON YOUR WORK BOOTS, FIRE UP YOUR LAPTOP.POUR YOURSELF A CUP OF COFFEE.BECAUSE THERE ARE GOING TO BE SOME LATE NIGHTS.2011, Anthem TV spotPROTECTING DREAMS:MORE THAN AN ADVERTISING MESSAGEAperson’s dream is the most through a minimally branded cinema centered on protecting dreams to one of important thing he or she will spot before major summer movies, inspiring people to dream fearlessly. The ever own. In 2011, American including releases such as Cars 2 and updated tagline “Insure Carefully, DreamFamily established a bold new marketing Transformers 3. A few weeks later, Fearlessly” and new messaging debutedcampaign, Dreams Protected, proclaim- branded television, print, digital and with regional TV spots during the Supering the company’s focus on proactively radio ads unveiled American Family as Bowl. Academy Award-winning actressprotecting dreams. The transcendent the source of the inspiring messaging and Grammy-winning singer Jennifermessaging emphasized the nobility of that encouraged people to pursue and Hudson starred in the TV spot; actualthe insurance business at a time when protect their dreams. customers pursuing their dreams wereinsurance marketing was overrun by crit- featured in ads, and an online Dreamters, creatures and cartoons. “This is a message that is resonating Bank was launched with information to with our customers, our agents and our inspire and motivate dreamers. The messaging challenged people to employees because it captures the veryreflect on their dreams and how best essence of who we are. It’s something The company also achieved ato protect them. Powerful music and that will build and grow over time,” new level of social media interac-images — individuals and families living Advertising Director Telisa Yancy said tion during the launch. As peopletheir dreams of travel, buying homes in 2011. tweeted their dreams with the hashtagand being active — resonated with #DreamFearlessly, artists on site at theaudiences. She was right. Dreams Protected DreamBank in Madison created personal turned out to be much more than an chalk drawings and tweeted them back During the campaign’s research advertising campaign. It energized to the individuals.phase, the marketing team conducted employees and agents, who realized ita survey on the state of the American described the very essence and purpose “This campaign has reflected ourDream, which showed 92 percent of of American Family. It influenced the customer-driven culture,” Yancy said.respondents believed in the American “Inspire, Protect and Restore Dreams” “This isn’t a commodity. It’s a relation-dream, but only 12 percent believed mission statement introduced in 2014. ship built on trust. Our brand messagingthey were living it. Using the survey shows that, and it’s resonated with ourresults, Dreams Protected was launched A year later, the campaign received a customers and our company.” slight facelift, moving beyond a message324 | Writing Our Own Rules, Charting Our Own Course

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The Dreams campaign promised to protect customers’ dreams, their lives, homes and cars. “American Family protects people’s dreams better than any other insurance company,” said Bacus. “Insurance is serious business and it shouldn’t be trivial- ized. It’s about providing proactive protection. Nobody does that better than we do and that’s what you’ll see in this new campaign.” Once the concept was established, Dan Guzman, Tracy Siemion and others from the creative development team worked with the Ogilvy advertising agency to bring the campaign to life with unique creative including TV and movie theater spots as well as print ads, billboards and radio.ABOVE: Lisa Bacus, marketing vice president, received a warm The Dreams branding initiative, however, was much morereception from members of the Agency Council for the new than a new advertising campaign aimed at customers. It was alsoDreams advertising campaign. designed to inspire employees and agents, cementing a brand Bacus, Yancy and Pettit were all relative newcomers to theproperty casualty insurance industry; Bacus had worked at Ford, and helping to build a culture where they recognize that theirsYancy at Ford and Burger King, and Pettit at Lands’ End. Theywere struck by the significant, positive impact American Family is a noble profession.had on its customers’ lives: being there in their time of need afteran accident, storm or death. “Insurance is more than a piece of But as the branding campaign neared release, Bacus, Yancypaper,” said Yancy. “We wanted to show the positive side of whatour agents and employees do.” and Pettit were still holding their breath. “Optimistic, inspir- The trio was determined to create inspirational messag- ing advertising that actually talkeding to engage customers, agents and employees in a meaningfulconversation to understand the critical value of insurance. After about insurance was radical andall, American Family didn’t simply help people repair their vehi-cles after a crash or rebuild their homes after a tornado; American risky,” said Yancy.Family also restored hope and dreams for a better future. The new campaign debuted at They took their concept of protecting dreams and a samplevideo advertisement up to Jack Salzwedel’s office to get his reac- the annual All American conven-tion. They were nervous. It wasn’t a slam dunk; it was a far cryfrom what the company and competitors had done for years. But tion in Hawaii that year, with aafter playing the video with its emotional, inspirational messag-ing, “we saw tears in Jack’s eyes,” said Pettit. They knew they remarkably positive reaction fromhad a winner. agents who stood and applauded By 2015, insurance companies were spending more than $6 billion annu- after seeing the first commercials. ally to advertise on television, radio and social media platforms. Auto insurers were spending the most. But Yancy was still worried. On the first night the commercials aired Telisa Yancy on television, one of the company’s call centers got a call from Atlanta. The caller said he wasn’t a customer, but thanked American Family for reminding him to “pursue my dreams.” And he said he’d like to become a customer. “Once I heard that, I started to relax,” Yancy said. Bacus had persuaded fellow members of the strategic leader- ship team to triple the advertising Sarah Pettit budget from $60 million in 2009 to $180 million in 2011 to promote the Dreams campaign. In later years, after the new campaign was established, the company cut back, partially because of expense management. The new adver- tising and growth initiatives worked, helping boost growth. For the six-month period from August 2011 through January the next year, new business applications increased more than 16326 | Writing Our Own Rules, Charting Our Own Course

DREAMBANK ENGAGES AND INSPIRESWhen visitors stepped into first opened the company’s door in stories of successful dreamers and free American Family’s flagship 1927. Some 25,000 people visited tips and resources to help them pursue store on the Capitol Square DreamBank during its first year. their dreams.in Madison, Wisconsin, they wereoffered a variety of interactive experi- Store employees, called dream cura-ences and tools to engage and inspire tors, guided visitors and helped themthem about dreams. It was called the explore their dreams. And, if theyDreamBank because it was located in a were interested, visitors could getcentury-old building that once housed help determining if they had the rightAmerican Exchange Bank. The inno- insurance protection and companyvative store opened Oct. 3, 2012 — to protect those dreams. DreamBankAmerican Family’s 85th anniversary offered a variety of creative self-guided— on the street where Herman Wittwer activities and diverse workshops. Visitors could access inspirational Dare to Dream | 327

JOPLIN’S JOURNEY TO RECOVERYDevastating tornadoes tore a day later. Over the next weeks and Pam Greninger remembers, “At the end through Joplin, Missouri, on months, they would handle more than of the first week, I could see our CAT May 22, 2011, killing 158 and 2,300 auto, property and commercial adjusters were in shock, but they just injuring more than a thousand people. claims, paying customers more than kept going.” At its peak, the main twister was up to $100 million. a mile wide with winds exceeding 200 Tom Keller, catastrophe operations miles per hour. Its path covered 22 miles But the numbers were the least of administrator, said, “Going above and in 38 minutes. More than 7,000 homes the story. What Joplin demonstrated, beyond is an everyday occurrence here were destroyed, along with hundreds of once again, was the incredible caring in Joplin. Our agents, sales managers businesses and public buildings. and empathy of hundreds of claim and adjusters did an outstanding job of employees and agents who listened listening to each individual’s concerns Within minutes, American Family to customers as they relived the awful and comforting them when they were claim adjusters and call center repre- night. Many would shed tears as they very emotional.” He said the collabora- sentatives were responding to the disas- heard customers describe the loss of a tion between people on the ground and ter and 100 people were on the ground loved one, friend or colleague. Agent across the company was amazing.328 | Writing Our Own Rules, Charting Our Own Course

Every Joplin agent was putting in almost were affected but hadn’t yet filed claims.round-the-clock hours during the 10 days “The enormity of the damage wasafter the storm, including Derek Holmes,whose office was destroyed. He quickly painful to comprehend,” said Hickman.set up shop in District Sales Manager Julie “However, most inspiring are the individualHickman’s office to service his policyhold- stories of how people survived and over-ers. Some agents helped people any way came considerable odds. We helped putthey could — wielding chainsaws, driving together the lives of many families andBobcats, working by kerosene lamp and small business owners.”partnering up in offices. American Family’s Joplin custom- Because so many people were left ers bought a promise from the companyhomeless, Catastrophe Claim Manager to protect and restore their dreams, andWendy Scheper’s team used records and during those days in 2011, agents andmapping technology to find customers who employees fulfilled that promise many times over. American Family’s catastro- phe team performed hero- ically in Joplin. Hundreds of employees and agents worked long days to help custom- ers. Executive Vice President Gerry Benusa discussed oper- ations with Wendy Scheper, catastrophe claim manager. Dare to Dream | 329

DATA MAKES THE DIFFERENCEThroughout much of its laying the foundation for a more Management department in history, when faced with data-driven organization. This 2015 to ensure the data assets challenges and big deci- included new policy and bill- of the company were properlysions, American Family leaders ing systems, new agent and governed, understood, accessibleoften depended more on their gut customer management systems and of high quality. Led by Viceinstinct than research or statistics. and enhancing the data analytics President Kari Grasee, itAfter all, Herman Wittwer started environment. Investments in the was placed in the Informationhis new company simply because analytics environment included a Services division.his heart and mind told him farm- customer data hub where infor-ers presented a lower risk than mation from various operating But it’s not enough to simplyothers. He was right. But insur- systems was brought together to accumulate and govern data. Theance became a data-driven indus- provide one view of the customer, value of data is unleashed when ittry. Successful companies used since centralizing customer infor- can be leveraged to drive insightsadvanced analytics (statistics mation remains a key to under- for a competitive advantage. Theand modeling) to make informed standing customers. company created the Strategicdecisions about products and Data and Analytics Division atservices, risk pricing, customer Early in the 21st century, the the start of 2014. Led by Vicesatisfaction and more. concept of “Big Data” was becom- President Justin Cruz, the divi- ing rooted across the industry — sion was charged with analyzing Along with industry tech- data in massive quantities bringing data to gain insights about prod-nology and data transforma- unparalleled transparency and ucts and services, as well as build-tions, two changes to American value to the business. At the time ing predictive models to supportFamily’s vision statement — in the system transformation began, the business, including pricing,2007 to become the most trusted the company was retaining a stag- consumer behavior and claims.and service-driven insurance gering amount of data — 3.4 peta- To capitalize on emerging tech-company and in 2014 to become bytes, equivalent to 70 million nologies and university research,the most customer-driven insur- four-drawer filing cabinets filled the company also created aance company — increased focus with pages of text. And more data Data Science & Analytics Labon customers and understanding was crossing the internet every in Chief Business Developmentand meeting their needs. second than was stored on the Officer Peter Gunder’s operation. entire internet 20 years earlier. Together, these groups discov- In 2009, the company began ered new insights to drive a betterto modernize its core systems The company created understanding of customers.through the Advance initiative, an Enterprise Informationpercent over the previous year. Retention was up and customer new products, pricing and packaging, all enabled by dynamicsatisfaction reached record levels by year’s end. Even though technology. Development teams were using agile methodology,policies-in-force dropped by 192,000 during 2011, all those new which breaks large projects into focused pieces handled by small,business apps were a positive sign of an approaching turnaround collaborative teams.The goal was to simplify core products and toon the horizon. add new coverages and discounts with more sophisticated pricing.ADVANCE MOVES CLOSER TO REALITY Advance teams created four base policies for auto, cycle, miscellaneous vehicles and watercraft. Customers could add cover-Meanwhile, hundreds of employees and contractors continued ages to meet their specific needs. In the past, every vehicle had itsworking on Advance, the incredibly complex project to create own policy. The new products would create a schedule of vehi- cles with all cars in a household listed under the same policy. This would make it easier to clearly identify all risks associated with one330 | Writing Our Own Rules, Charting Our Own Course

household and price it appropriately. Teams evaluated more than consolidating customer information and providing quick access2,000 auto and property product ideas that came from research, as to other frequently used systems. It was also integrated with thewell as feedback from agents, employees and customers. telephone system, so that when a customer already in the system called, that customer’s record popped up on the APEX screens. The company’s new approach to pricing was based on collect- The system provided a complete customer view, allowing aning more data to determine each customer’s level of risk. EVP Bill instant look at all policies, quotes, applications, billing data, calls,Westrate said, “We’ll analyze a wider variety of information about emails and letters. Representatives, for example, could seamlesslyour customers, including traditional driver and property data, as continue a conversation an agent started and agents could see callwell as predictive data.”That predictive data included credit score center interactions with customers.information, such as a customer’s payment history; actuarial stud-ies show when and how a customer pays her bills can indicate the EXPENSE MANAGEMENTlikelihood of filing future claims. GOES INTO HIGHER GEAR Late in 2011, policy sales and service care center represen- In the midst of the excitement about the Dreams campaigntatives started using APEX, a core Advance system. A small and the feverish work on Advance, company officers, directorsgroup of agency sales managers and their assistants piloted it and managers continued to struggle with expense management.from a field perspective. It was a single desktop application, In September, the senior leadership team announced a goal to lower the expense ratio from 42 percent to 37 percent in fiveBELOW: The transition from the old Agency Data System (ADS) years. Leaders were upfront, saying budgets would be flat, with additional reductions in the workforce likely. Understandably,to APEX was complex. The new system provided agents and the anxiety level among many employees once again flared up.call center representatives with faster access to a broaderrange of customer information. Chief Financial Officer Dan Kelly insisted the company would not take the easy way out by simply cutting expenses across the board. Controller Kari Grasee worked with outside consultants, creating benchmarks and divisional expense targets. Officers were charged with meeting those targets, and some budgets went up, others down. In October, the company consolidated 20 claim operations into six offices in Denver; Eden Prairie; Minnesota; Phoenix; St. Louis; and Madison and Pewaukee, Wisconsin. More than 700 people were impacted, with many moving to another office, but 170 employee positions were eliminated. The company eliminated four officer positions, mainly through reorganization. And a planned reorganization in I/S eliminated 87 positions, most of them contractors, reducing the division’s workforce to around 850. ENDING THE YEAR WITH OPTIMISM As 2011 came to a close, leaders were optimistic that the worst was over. It had been a very rough five years, with policy count dropping by more than a million and revenue declining by $700 million. But there were encouraging signs, as well: Customer satisfaction and retention were at all-time highs and new business applications were up significantly.There were better days ahead. Dare to Dream | 331

The American Dreamspublication is sent tocustomers twice a year.It contains helpful tips,safety and insuranceinformation. This editionfeatured two of AmericanFamily’s brand ambas-sadors, and the name onthe sign matched the cus-tomer’s name.

The biggest risk is not taking any risk. In a world that’s changing very quickly, the only strategy that is guaranteed to fail is not taking risks. — MARK ZUCKERBERG founder, Facebook17 STRATEGY AND TRANSFORMATION

CHAPTER 17 | STRATEGY AND TRANSFORMATIONA s 2012 dawned, the senior leadership team’s focus was not on the New Year, but the New Century. Leaders understood American Family must design and implement an innovative strategy to survive in the new world. It was clear thatthe basic tenets of how insurance had been priced and sold in Fourth, safer roads, cars with smart technology and the like-the past were disappearing. lihood of driverless cars some day meant reduced needs for auto insurance and falling premium long term. First, customer demographics were changing, with a gapbetween the Baby Boomers and younger consumers, many of The leadership team members believed American Familywhom preferred to buy their insurance coverage direct — online could differentiate itself in this new marketplace by providingor through a call center. Consumers were also showing increased world-class customer service, including the expertise and empa-price sensitivity, which wasn’t likely to change. thy of its agents, as well as developing a seamless multichannel experience giving customers direct options. Second, the rise of pervasive social media had led to increasedcommunication about insurance companies among consumers, Moving quickly, in June CEO Jack Salzwedel andenabling some to self-organize into groups. Forward-looking President Dan Schultz gave the board of directors a whiteinsurers were using data mining and smart analytics to better paper rationale for buying a non-standard auto direct writer.understand their customers, giving them an edge and allowing Leaders stressed “American Family remains committed to itsthem to better rate individual risks. agency model, an institutional strength and core capability.” But they also insisted the company had to provide custom- Third, the number of Midwestern-based weather catastro- ers with additional ways to purchase products, citing changingphes was increasing each year, making geographic expansion more customer preferences and a proliferation of direct channelscritical than ever. Pursuing a national footprint remained a key among American Family’s competitors.way to spread risk geographically and provide a larger premiumbase to fund advertising, technology improvements and other The leaders recommended acquiring a flexible and scalableoperational costs. direct channel platform, specifically a non-standard direct auto334 | Strategy and Transformation

ABOVE: Through the years, Denver customer care representative Jackie Williams encountered growing numbers of younger cus-tomers as the country’s demographics changed. By 2015, Millennials surpassed Baby Boomers as America’s largest generation,according to U.S. Census Bureau estimates. Millennials, defined as those ages 18-34 in 2015, numbered 75.4 million, surpassingthe 74.9 million Baby Boomers, ages 51-64. And Generation X, ages 35-50, was projected to pass Baby Boomers by 2028.writer that would provide immediate access to new states. The specializing in higher-risk drivers. Over the years, ASIC policyacquisition could then be used in broader markets and expanded counts had dropped. And, ASIC’s underwriting and pricinginto additional lines of insurance such as homeowners. The strat- lacked the sophistication of direct non-standard competitors,egy after purchase would focus on geographic expansion through most of which offered their customers flexible payment plans.the direct company’s infrastructure and distribution platform. Buying a direct non-standard writer would get American Family back into a growing customer segment. And these new non-stan- Why a non-standard direct writer? As management explored dard customers could be offered additional products, such asoptions to get direct distribution capabilities, it became clear renters insurance.most of the attractive and available acquisition targets were oper-ating in the non-standard market. Non-standard insurance is SETTING THE STAGEsold to those drivers who don’t qualify for standard or preferred FOR A BIGGER FOOTPRINTdue to past driving violations, accidents, missed payments orlapses in coverage. Even as it began to consider purchasing a non-standard direct writer, the senior leadership team wanted to keep all options American Family, of course, already had its own non-stan- open. No matter how the company would expand in the future,dard company, American Standard Insurance Company (ASIC), either with an agency or direct model, it would need addi-which did not seek higher-risk customers but rather served as tional state licenses to operate outside the existing footprint.a holding place for drivers who likely would eventually qual- This was a lengthy, cumbersome process, and required workingify or re-qualify for standard coverage. Drivers with particularlypoor driving histories or payment histories tended to buynon-standard coverage through direct channels from companies Dare to Dream | 335

state-by-state with regulators to get the necessary approvals. profitability efforts were beginning to bear out in company After several months of work, the company reached agree- results with non-cat loss ratios achieving historic lows and the commitment to lower the expense ratio from 42 percent toment in June 2012 to buy Illinois-based Lumbermens Casualty the upper 30s.Insurance, an affiliate of Lumbermens Mutual InsuranceCompany, formerly known as Kemper Insurance. Lumbermens FINDING THE RIGHT COMPANYCasualty was considered a “shell” company because it had stopped AT THE RIGHT PRICEwriting and renewing policies in 2003, but it had what AmericanFamily needed: insurance licenses in 44 states and the District of Salzwedel had asked Peter Gunder to lead the search for directColumbia. That left American Family with only six states where insurance companies that might be candidates for mergerit did not operate or have licenses, and now it could enter states or acquisition (M&A). Gunder quickly hired Bill Greiter, amuch faster with less regulatory hassle. Harvard graduate and 25-year veteran at a New York global insurance firm. Greiter had overseen the critical due diligence Schultz, meanwhile, had CFO Dan Kelly’s team examin- process for hundreds of M&A deal explorations. His specialtying the company’s financial health to “determine whether we was making sure the right subject matter experts thoroughlycould expand.” The group concluded expansion was risky unlessthe company improved homeowner profitability and broughtdown the expense ratio. That was starting to happen: PropertyBELOW: CEO Jack Salzwedel spoke with other industry leaders at a Joint Property Casualty Industry meeting in New York, sharinghis views on the future of the industry. The forum was sponsored by the Insurance Information Institute.336 | Strategy and Transformation

examined companies during the due diligence process to deter- employees, teaching them new skills during the process of analyz-mine if the purchase would meet the buyer’s strategic objectives. ing the potential acquisition. Gunder and Greiter created an internal due diligence team focused on finance (Troy Van Beek Greiter hit the ground running because Gunder had already and Jane Nordby), technology and distribution (Terry Siefert andinitiated contact with a direct non-standard writer on the market. Todd Fancher), products (Ben Wright, Ken Landolt and MarcGreiter hired Deloitte Transaction Services, which brought in Miele), marketing (Telisa Yancy) and actuarial (Roger Yard anddue diligence experts to work side-by-side with American FamilyBELOW: The due diligence process was a critical component of the General and Homesite acquisitions. Many individuals witha variety of expertise contributed. Pictured below: 1. Asya Alexandrovich, corporate legal associate general counsel; 2. JoyceDieter, corporate planning administrator; 3. Bill Greiter, affiliate services director; 4. John Van Berkum, Lean customer valuemanager; 5. Dawn Spaanem, tax manager; 6. Kari Grasee, information & data management VP; 7. Kris Karsten, administrativeassistant; 8. Gerald Johnson, claims product HDR advisor; 9. Bob Ness, corporate risk & insurance administrator; 10. MichelleMorrow, loss reserving/forecasting manager; 11. Doug Stoffels, financial planning & analysis manager; 12. Kristin Kirkconnell, chiefinformation officer; 13. Lori Krumberger, enterprise risk management director; 14. Neil Zamansky, senior fixed income portfo-lio manager; 15. Rick Schelthelm, corporate financial analysis and planning director; 16. Dan Harris, tax director; 17. Matt Corn-well, Lean customer value AVP; 18. David Holman, chief strategy officer/secretary; 19. David Endres, corporate legal VP; 20. MarcMiele, Midvale director; 21. Bruce Lee, national product underwriting director; 22. Mary Theilen, chief risk officer; 23. Ben Wright,AVP product management — direct auto; 24. Greg Hellenbrand, investment risk management senior analyst; 25. Ken Sherman,reinsurance underwriting manager; 26. Ken Landolt, national product implementation director; 27. Troy Van Beek, controller VP;28. Peter Gunder, chief business development officer; 29. Todd Fancher, life president; 30. James Madden, computing servicesVP; 31. Roger Yard, P&C loss reserving and forecasting director; 32. Mark Schluesche, state product manager — direct auto;33. Ken Muth, media relations director; 34. Bill Westrate, enterprise president. 16 26 17 27 18 28 29 30 31 32 33 34 25 78 21 22 23 24 61 19 20 9 10 11 12 13 14 15 23 45 Dare to Dream | 337

Michelle Morrow), among many A HISTORIC DAY: THE GENERAL JOINS AMERICAN FAMILY others. After initial due diligence, On Sept. 25, 2012, American Family announced it had reached the company quickly determined agreement to purchase PGC Holding Corp., and its subsidiaries, including direct non-standard auto writers Permanent General the prospective company wasn’t the and The General. The deal would close at year’s end. It was the right fit and turned its attention to ABOVE: The mascot for Permanent General, known as The General, Permanent General (The General) was featured in television commercials. He was shown sky- diving, bungee jumping, snowboarding and playing football, in Nashville. baseball and soccer. Ironically, The General had actually been American Family’sBill Greiter first target, but because The General had what it called “inde-pendent agents,” American Family had quickly backed off. Itultimately turned out the “independent agents” were insurancebrokers who represented only a small portion of their business.When Salzwedel learned that, he sternly told his senior leadershipteam that time and money had been wasted on the explorationof the other company because The General hadn’t been properlychecked out first. His voice raised, he said, “We have to be morecareful, more thoughtful,” and directed Gunder’s group to thor-oughly investigate Permanent General.Gunder and Greiter brought in the investment banking firmGoldman Sachs, which concluded The General met AmericanFamily’s criteria for acquisition and was ripe for purchase. TheGeneral had previously been purchased by a private equity firm,Capital Z, which held onto the company longer than one might have expected, primarily because the 2008 recession put the brakes on big deals. Capital Z was in the market to sell. Overtures were made and the team, already in place, turned its highly focused due dili- gence on The General. During any M&A explora- tion, the top executives of the buyer and seller normally meet only atRandy Parker the end of the negotiations after a tentative deal has been reached.But Salzwedel insisted he wanted to meet Randy Parker, TheGeneral’s CEO, right away. Part of this was Salzwedel’s person-ality and way of doing business. He liked to know the kind ofperson he was dealing with and just as important, if Parker wassolid, he and Schultz wanted Parker to stay on board after thetransaction. Salzwedel and Schultz met Parker and hit it offimmediately. It was clear Parker had done a superb job growingthe company, and was a hands-on leader who knew the details ofhis operation. Salzwedel remembered thinking Parker “has theinstinct to succeed.”338 | Strategy and Transformation

ABOVE: The General’s new Brand Ambassador, Shaquille O’Neal, spoke at The General’s 2017 Leadership Conference in Nashvilleand visited with employees. From left: Sherry Waters, Shaq, Janayia Johnson and Benada Jones.ABOVE: Permanent General CEO Randy Parker and American Family CEO Jack first time in American Family’s history it had acquired another active insurer.Salzwedel developed a good relationship during the acquisition process. Most commonly known as The General, the acquisition target issued auto policies in 25 states, including 14 not in American Family’s operating territory. Headquartered in Nashville, it reported $270 million in direct written premium in 2011. Most of its customers purchased coverage through call centers and the internet. “This is a historic day and another step toward becoming a ‘nearly national’ company,” said Salzwedel. He noted the acquisition “provides geographic expansion through a company with different capabilities and successful experience with a direct-distribution platform” Dan Schultz said the mostly younger driv- ers in the non-standard market segment strongly Dare to Dream | 339

BRAND AMBASSADORS INSPIRE DREAMERS As American Family’s like-minded individuals, who’ve outside Madison; and two-time brand messaging turned worked hard to pursue their Olympic goalie Jessie Vetter, a to inspiring and protect- dreams and who are also focused University of Wisconsin gradu- ing dreams, aligning with nation- on inspiring others,” says Chief ate and daughter of Madison- ally known and respected leaders Marketing Officer Telisa Yancy, area American Family agent Tom in high-profile roles was a natu- who was advertising director Vetter. They were quickly joined ral evolution. While many compa- when the Dream Ambassadors by entrepreneur Kathy Ireland and nies have spokespeople, American program started. 2012 American Idol winner Philip Family took a different approach, Phillips. After the initial relation- partnering with brand ambassa- The ambassadors soon ships received positive feedback, dors, not for what they could do appeared in advertising, made the company added NFL quarter- for the company, but what they promotional appearances and back Russell Wilson to the group could do to inspire and motivate had millions of followers on social in 2013. Russell, Steve, Phillip customers. media platforms, sharing posi- and Jessie appeared in a televi- tive messages and videos about sion ad that debuted during the Partnering with musicians, American Family. Super Bowl and featured Philip’s celebrities and athletes was some- hit song “Home,” as part of the thing the company approached American Family’s first brand Dreams Protected advertising cautiously. “We knew we wanted ambassadors, in 2012, were well campaign. Wilson’s and Phillips’ to build relationships with known in its hometown: PGA golfer Steve Stricker, who residesJessie Vetter Russell Wilson Derek Jeter J.J. Watt340 | Strategy and Transformation

contracts with American Family — both current and future — but “Our brand ambassadors exem-later expired. also inspire them to dream and to plify that a dream champion do so fearlessly,” Yancy said. means more than cheering from In 2015, two new athletes at the sidelines; they inspire us tothe top of their game joined the Late in 2016, the company keep going, to more, dig deeper.ambassador team — 2015 NBA began using the reputations and They set the example and activelyMVP Kevin Durant and three- followings of some of the ambas- assist others by helping themtime NFL defensive player of the sadors to grab people’s atten- overcome challenges,” Yancy said.year J.J. Watt. And in 2016, Major tion and demonstrate American “Their actions mirror what we, asLeague baseball player Derek Family’s dedication to dreamers. a company, stand for. They liveJeter and singer John Legend In a new advertising campaign, the it, they demonstrate it and theybecame ambassadors as well. brand ambassadors became dream represent us.”University of Wisconsin head champions, involved in true-lifebasketball coach Greg Gard joined situations where they could make In 2016, American Family’sthe ambassador team in 2017. a difference. In television commer- marketing team helped connect cials, the ambassadors would one of its operating companies, “To help us support, champion surprise people by showing up The General, with NBA legendand protect our customers’ dreams, unannounced and providing face- Shaquille O’Neal as its first brandwe seek out different ambassa- to-face, personal support for their ambassador, teaming up with itsdors whose experiences and values dreams and endeavors. famous animated mascot.not only motivate our customersKevin Durant Kathy Ireland Phillip Phillips Steve Stricker Dare to Dream | 341

DAN R. SCHULTZA SMART AND HUMBLE LEADERSoon after becoming president President 2011 - 2014 “friend of the field” grew. His vision of American Family in 2011, Dan of becoming “nearly national” in five Schultz visited a catastrophe his first All American agent conven- years became a tangible goal withsite to see firsthand how the compa- tion in Hawaii after becoming president, strong support across the organiza-ny’s claim adjusters were helping and says, “My son, Matt, had just turned tion. Schultz also impressed agentscustomers who suffered storm losses. 21 and was at the bar putting drinks and employees alike with his intri-He visited an agent’s office where the on my tab for some agents, who even- cate knowledge of how the companyadjusters were working and one of the tually asked him who his dad was.” worked. He had spent his entire careeragent’s customer service represen- When Matt responded his dad was in the company’s finance area, hired bytatives walked in and said, “You must Dan Schultz, one of the agents replied, Dave Anderson, who eventually becamebe the new claims adjuster!” Schultz “Who in the hell is Dan Schultz?” CEO. Anderson routinely challengedsimply smiled and said, “No, I’m not Schultz to always know his facts, askingthat important.” That quickly changed, as Schultz him “Do you know that or do you think began spending days in the field, visit- you know that?” And he worked many That response was typical of ing with agents in their offices or years under Brent Johnson, his prede-Schultz’ remarkable humility. When talking and listening at town hall meet- cessor as chief financial officer, whomasked to describe him, people offer ings. His engaging personality soon Schultz describes as one of the mostwords like fun, friendly, smart, effec- won him many new friends and his ethical individuals he knows. “Brenttive and honest. His good friend, Jack reputation as an approachable, solid taught me to do the right thing, even ifSalzwedel, who chose him to serve as it isn’t easy.”president, admired Schultz becausehe’s “unassuming, genuine and authen- Friends of Schultz all have humor-tic.” Throughout his 37-year career, ous stories. Because of colorblindness,Schultz made it a point to focus on the Schultz occasionally would come tocompany’s success, rather than his own. work with one black and one brownHe and Salzwedel worked effectively shoe. “Once I came to work with myas a team, firmly on the same page polo shirt inside out. Al Meyer toldfor transforming the company into a me about it and swore he’d never tellnational enterprise with both agent and another soul. Of course, anyone whodigital sales capabilities. knows Al knows it didn’t take long for my shirt to pop up in his stories!” Many people were surprised whenSchultz was elected president because When he retired late in 2014, Schultzhe was nearing the end of a three- left with a strong sense of satisfac-decade career and would not follow the tion that the company he loved was intraditional path of eventually assuming a much better position to succeed inthe CEO role. He was not widely known the rapidly changing insurance market-within the organization, particularly in place. “All the seeds are in place forthe field, though board members and this organization to become even morefellow executives were well aware of his successful and meet the evolving needsabilities. Schultz remembers attending of our customers.”342 | Strategy and Transformation

ABOVE: The General offered auto insurance for drivers who have a history of driving violations or accidents, lapses in coverage orless-than-perfect credit. The company, acquired by American Family, was headquartered in Nashville, Tennessee. By 2016, Search Engine Journal esti- deal from Permanent General about direct distribution, which mated 2.1 billion people had social media is essential because we must reach customers who want to deal accounts, and of those, 1.7 billion were active users. with us through different channels,” said Schultz.preferred direct channels and The General would help American American Family would pay $239 million for the acqui-Family “regain our footing in this big and growing market.” sition, and the leadership team believed its strategic value far exceeded the price. For 2012, The General had $265 million of But both Salzwedel and Schultz knew The General gave written premium and a book value of $125 million at the time ofAmerican Family much more than just additional states and purchase. As always, leaders reassured the field that agents wouldpremium.They knew they were buying an experienced, successful continue to be American Family’s primary business model (andwriter that used the internet and call centers to reach custom- revenue producer), with Schultz once again describing agentsers who preferred doing business that way. “We’ll learn a great as “the heart of our company” and noting research showed large numbers of customers preferred to deal with an agent. And, the company noted there was very little overlap between The General’s and American Family’s customer base. Dare to Dream | 343

Randy Parker agreed to stay on as Permanent General’sCEO, in part because Salzwedel and Schultz had guaranteedhe could continue to operate the company with a high degree ofautonomy, retaining its separate brand and operations. Parker toldhis employees Permanent General would benefit from AmericanFamily’s financial strength, which would provide opportunitiesfor continued expansion.THINGS ARE LOOKING UP ABOVE: Agents in snow country had long pleaded for more com-While the management team laid out its strategy for the future petitive snowmobile rates. The company responded in 2012.and conducted its acquisition search, agents and employeesremained focused on growing American Family. Divisions were rules that considered previous claims, new expert underwritingworking together better than ever to implement wide-rang- models and more audits to make sure accurate claim paymentsing plans to boost sales. The Dreams advertising, new discounts were being made. All of that, plus tens of thousands of propertyand some territorial pricing changes were bearing fruit. More surveys helped lower the property loss ratio from 89 percent inlicensed representatives were coming on board in the call centers, 2009 to 77 percent in 2012, better than many competitors in thewith an annual goal of sending 30,000 new households to agents American Family operating territory.who could cross sell other products. More agents-in-training(AITs) were in the field. The auto/life discount was increased for As 2012 came to a close, things were definitely looking up—all customers from 2 to 5 percent. Personal lines unveiled new revenue increased $72 million and policies-in-force jumped byand expanded property discounts, as well. 77,000, the first year policies had grown since 2006. Despite big And after the preceding years’ financial meltdown in thehome market, renters insurance now became a higher prior-ity because one-third of Americans were renting. A preferrednew customer discount became available in most states, allow-ing agents to offer an additional 10 percent discount to get thispreferred segment of business. Changes also made more custom-ers eligible for the new switch-and-save discount. More attentionwas focused on motorsports fans to help retain customers andattract high quality multi-line customers. For example, afterdetermining there were 764,000 snowmobiles in the compa-ny’s operating territory and after research showed snowmobilecustomers had an average of six policies, snowmobile rates werereduced 15 percent to improve competitiveness. Agency sales managers worked more closely than everbefore with agents to help them execute their individual salesplans. High-producing agents received staffing incentives foragents-in-training to help increase their production. Lower-producing agencies received more one-on-one coaching on thebasics, such as gaining more leads or closing sales. Throughoutthe year, increasing numbers of agents gained access to the newAPEX system. Property profitability remained a priority as always, and thecompany focused on continued rate increases, higher pricingfor areas prone to wind and hail, tighter new business eligibility344 | Strategy and Transformation