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In 30 years of building up an employee benefits support firm, Skip Kitchner and Rich Pierro have attracted more than customers.
The duo, co-owners of Bradenton-based Kitchner & Pierro, have also drawn the interest of potential suitors and partners. Kitchner says in just the past few years, for example, two large Tampa firms have tried to buy the company.
Every potential suitor, however, has been met with resistance for reasons that usually go back to missions. Says Kitchner: “We've always had trouble finding the right partner.”
That was, until this past summer, when Kitchner and Pierro sat down for lunch with a pair of local insurance veterans. Sitting inside a swanky downtown Sarasota restaurant, Pierro says it was like love at first sight — at least when it relates to the complicated business of company partnerships.
On that June afternoon, Kitchner and Pierro met Al Purmort, Jr. and Pat Del Medico — the executives behind Al Purmort Insurance, a leading independent property and casualty agency in the Sarasota-Bradenton market. The firm has been hit hard by the recession, as 70% of its commercial insurance business was with contractors and construction companies.
So in seeking a way to diversify its revenues, Purmort called around Tampa and Sarasota to find a good employee benefits firm to partner with. He spoke with people at companies such as Blue Cross and Aetna. Every conversation led him to Kitchner & Pierro.
(The Observer Group, parent of the Review, is a client both of Al Purmort Insurance and Kitchner & Pierro.)
Purmort, having never met Kitchner and Pierro, invited them to lunch at the Bijou Cafe, across the street from the Sarasota Opera House. It was a prefect first date.
“As soon as I sat down,” says Pierro, “I felt really comfortable with these guys.”
The feeling was mutual. Says Del Medico: “It was a very unique situation.”
So starting that day, the foursome began mapping out what a partnership would look like and how it would work.
The partnership essentially revolves around each firm pitching the other firm's services to clients. The four principles have also formed a separate company to handle and distribute the revenues and commissions generated from new business that stems from the partnership.
Executives at both firms declined to elaborate on the financial arrangement or how much extra revenue they expect to pull in from it.
Nonetheless, all the players say the collaboration has big potential. Says Kitchner: “I don't think anyone in the local market is going to be able to offer what we can with this partnership.”
A 'complicated business'
While the partnership sounds nice on paper, the foursome all went into it with a skeptical mindset, which is saying something for people trained in the art of cost-risk analysis.
“These things fail all the time,” says Purmort, citing pitfalls such as an office culture clash, misused resources and poor planning.
But the benefits, at least in the minds of all four principles, significantly outweigh the risk of failure. Purmort, for example, says it gives his firm a competitive advantage at just the right time: He has seen some bigger insurance firms in the Tampa area try to move “down market” and pick up customers in Sarasota, to make up for revenues lost in the recession.
Plus, teaming up with an employee benefits leader such as Kitchner & Pierro eliminates a lot of hassles for Purmort and Del Medico. “That business has become so complicated,” says Purmort, “that you have to devote serious financial resources to it to make it work [on your own.]”
Purmort has instead devoted resources into finding partnerships that allow his firm to expand its reach without diluting its focus of providing property and casualty insurance to local businesses and individuals. For example, in 2006
Purmort bought a share of a worker's compensation insurance firm in Lakeland.
That partnership has brought in an additional $1 million in annual revenues to the company.
Another key move for the firm, says Purmort, was bringing in Del Medico in 2007 to run the operations side of the business and bring order to the growth. Del Medico previously ran a sales department at Progressive Employer
Services, a $35 million Bradenton-based human resources and professional employee organization firm — a company founded by local entrepreneur Steve Herrig, whose first job when he moved from Iowa to the Gulf Coast in the
1980s was with another Purmort family-run insurance business.
When Del Medico took the chief operating officer position with Purmort, he joined a family-run company with an extensive lineage in the insurance industry. Indeed, that history can be traced back to 1876, when a group of five Ohio farmers in search of less expensive insurance formed their own coverage group. The group included Minor La Doyt Purmort, who was elected secretary.
That company still exists today and a Purmort is still at the helm of it. It's now known as the Central Insurance Cos., a Northwest Ohio-based firm with combined client assets of more than $1 billion, a surplus of $300 million and customers in 19 states. Four generations of Purmorts have worked in executive roles in the company, including Paul Purmort, Al Purmort's grandfather.
Paul Purmort moved his family to the Gulf Coast in the 1950s, where he and his two sons, Al and Wells Purmort, got into the local insurance business again. In 1985, Al Purmort, Sr. left that company to start his own self-named firm. The junior Purmort joined that firm in 1993.
Great potential
While Kitchner & Pierro's history doesn't trace back to 1876, the company does have a similar track record of growing to meet new demands in the marketplace.
Kitchner, whose first career was as a teacher at St. Stephen's Episcopal School in Bradenton, founded the company in 1975. He met Pierro in the early 1990s at a local networking meeting of professionals in the employee benefits field.
The duo soon began seeking ways to expand the company's client base, starting with going door-to-door in Bradenton business parks. The firm has since grown to 13 employees, with two offices and more than 200 clients.
But while the company has had spurts of success over the last decade, Kitchner says the partnership with Purmort represents the firm's greatest potential to find new business. “The very essence of our business is protection,” says Kitchner. “And we weren't providing complete protection to our clients.”
Each firm began telling its employees about the partnership in July. Kitchner and Purmort then set up a dual-office social meeting at a Sarasota restaurant, so employees could get to know each other.
One of the biggest fears, from both sides, is that employees will worry that one firm will do something to mess up another firm's client relationship. “The first step was to make sure everyone was comfortable with each other,” says Kitchner.
The next step, which both companies have been doing since the beginning of October, is to start marketing the new partnership to clients. Phase one is to present joint sales pitches to mutual clients regarding any gaps in coverage.
The companies eventually plan to make dual sales calls on clients that have only worked with one partner or, in some cases, neither partner. The trick, all the principles say, is to keep the process low key and low maintenance.
“Customers want to minimize the amount of people they deal with,” says Del Medico. “And they want simplicity.”
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