Picking His Spots
 American Integrity Insurance Group Tampa Robert C. Ritchie President, CEO [Photo: Jeffrey Camp] |
On the surface, Robert Ritchie seems to have a star-crossed endeavor: Insurance industry veteran from landlocked Ohio packs up to move to hurricane-prone Florida to open an insurance company, begins trying to raise money when Katrina storms Mississippi and Louisiana.
But Ritchie did raise the $10 million he needed, from Dallas family office Sowell & Co., and this year took over 64,000 policies from state-subsidized Citizens Property Insurance.
Ritchie, 48, picked a mixed bag that includes mobile homes, which he says can be a profitable line if the homes are of recent vintage and properly tied down. "You've got to pick your spots," he says.
His spots include Miami-Dade, which holds 11% of his risk. Broward, Duval, Orange and Polk counties round out his top five counties for policies with the rest scattered over 61 counties. His average coverage is $222,671. Mobile homes make up 26% of his portfolio with rentals comprising 29% and homes 45%.
"I've got to compete on service, and I've got to compete on relationships," he says. Ritchie wants to add other product lines and expand beyond Florida. As for the state insurance picture overall, he says, "I think the crisis will get worse before it gets better."
Catering to the Wealthy
 PURE White Plains, N.Y., and Plantation Ross Buchmueller President, CEO [Photo: Timothy Healy] |
Buchmueller, 42, who racks up thousands of frequent-flier miles traveling from New York to Florida, knows the rich. He was president of AIG's private client group until 2006, when he founded his own management firm. This year, he founded PURE, for Privilege Underwriters Reciprocal Exchange.
Reciprocals -- USAA is probably the best-known example -- are owned by their members and carry a significant tax advantage. At traditional insurers, roughly one-third of every dollar of premium not needed to cover operating expenses and claims is taken by taxes before the profit is added to the insurer's surplus. In a reciprocal, that underwriting profit is instead designated as a premium overpayment and returned to members' subscriber accounts. Accounts at PURE are pooled to build the surplus, but members can take the money with them when they leave.
PURE has 200 members, though Buchmueller plans 2,500 by year-end. Initially, members had to make a one-time contribution to PURE's surplus equal to half their first-year homeowners' premium. Now, they must pay 10% of their premium for the first five years. Management fees total 22% of premiums, which average $10,000, and commissions to agents another 10%, a cost structure Buchmueller says is competitive.
PURE, which also writes jewelry, art, umbrella and auto coverage, has saved customers, insuring on all lines, an average of $6,300 annually, he says. For an insurer, the large-home market has a favorable risk profile -- homes are less vulnerable to storms, there's not much fraud and clients insure for proper values, Buchmueller says. "It's a very attractive segment."