Company. Sunz Insurance Industry. Insurance Key. Firm hopes to expand its presence from around 10 to more than 40 states.
Iowa native Steve Herrig hit the California coast after he graduated from the University of Dubuque in the 1980s, in search of fun and sun.
An analytical and ambitious son of an insurance salesman, Herrig hated the Golden State. People were insincere, and the ocean was dirty and cold.
Herrig quickly shifted coasts. He moved to Florida, and settled in Sarasota. After a stint painting houses, he got a job selling insurance at Purmort & Martin, one of the most established agencies in town.
That was the beginning of 30-year adventure in insurance, where Herrig has covered a wide gamut of roles. He sold insurance, and then he ran his own firm. He also launched a professional employer organization, Sarasota-based Progressive Employee Services, from nothing and helped build it into a $50 million enterprise with 160 employees in less than a decade. Professional employer organizations, also referred to as employee leasing firms, handle employee-related matters for clients, from payroll to health insurance. “The only thing I haven't done,” quips Herrig, “is to be in reinsurance.”
Herrig, 54, says his latest gig, turning around and now running Sarasota-based Sunz Insurance, could be his best accomplishment yet. Sunz writes and offers a range of workers' compensation insurance products, including claims and case management. Clients are mostly PEOs and mid-size and larger staffing firms, usually with at least $500,000 in annual sales.
“Our reputation is getting better and better,” Herrig says, “and people are starting to come to us.”
Sunz is on a high-growth trajectory in several metrics. Premiums are up 62.9% since 2012, for example, from $38.6 million to $62.9 million. Surplus, the amount of assets that exceed liabilities, is up 242% since 2012, from $4.47 million to $15.3 million in the second quarter.
And in a key insurance industry metric, combined ratio, Sunz is on four-year roll. Combined ratio is the percentage of losses plus underwriting expanses divided by earned premium. A ratio less than 100% signifies the company has profitable underwriting, while a ratio more than 100% means the company is paying more in claims than what comes in for premiums.
The combined ratio at Sunz has dropped from 148.9% in 2012 to 73.5% in 2014, according to company data. The ratio was 63.3% through June.
“We are really poised to expand our business nationally,” says Sunz President Terri Stevens, a longtime Florida insurance executive who joined the company in May. “We are looking forward to building out this firm.”
Other signs of growth dot Sunz.
For starters, the company has been adding to the payroll by a few people a week, says Herrig, and now has about 40 employees.
Sunz also moved into a new building in June, an 8,000-square-foot facility off Fruitville Road, east of Interstate 75. The building, which Sunz bought for $1.25 million in October 2014, is more spa than insurance company at first glance. A pond with lily pads is out front, and visitors must walk over a short footbridge and a wide patio to get the front door. The space inside, the former home for a biological engineering firm, is bright and neat, with wood paneling and modern furniture.
One underpin to growth projections: an alliance Sunz signed with Wayzata, Minn.-based Benchmark Insurance Co. in September. The agreement, called a “fronting partnership” in the industry, allows Sunz, for a fee, to sell workers' comp insurance products in about 40 states in which Benchmark already operates. Sunz is licensed in 10 states, mostly in the Southeast, and has applied for approvals in 16 more, but the deal with Benchmark, say executives, is faster and efficient. Says Herring: “This will enable us to get a lot of clients we otherwise couldn't have.”
Herrig, who constantly writes and rewrites a to-do list on a legal pad bound in a leather binder throughout the day, says his biggest obstacles and opportunities are essentially the same: Make sure products and customer service at Sunz match the potential.
“The immediate challenge,” says Herrig, the Business Observer's Entrepreneur of the Year for the Sarasota-Manatee market in 2007, “is for us to stay ahead of the curve because the growth is there for us.”
The alternative is a step backwards. Says Herrig: “A bad reputation gets around faster than a good one.”
One way Herrig says Sunz will remain ahead of the curve is through its leadership team. Top executives include:
Stevens, the president who joined the company seven months ago, came from Deerfield Beach-based Normandy Insurance Co., where she was president and CEO for five years.
Before that Stevens held management posts at several prominent area insurance firms, including FCCI and Riscorp. She also spent a decade at Sarasota-based Unisource Administrators, a workers' comp underwriting firm, where she worked with founder Andy Olwert; Herrig says Stevens is an asset for Sunz in many ways. “She has a following that helps us get and retain people,” says Herrig;
Olwert, who runs claims oversight for an affiliate company, Sunz Insurance Solutions LLC. Olwert founded Unisource in 1995 and over a decade built it from a one-employee shop to a $40 million business with 300 employees and divisions in third-party claims and other niche areas. Unisource merged with an Oklahoma firm in the same niche sector in 2008;
Glen Distefano, COO and onetime interim chairman of the board at Sunz, who has been with the firm since 2005. Distefano has been in the staffing and PEO industry since the late 1980s. He ran a temp-staffing firm focused on agricultural labor for five years before Sunz;
Linda Bishop, who joined the company in 2008, initially as the controller, was promoted to CFO last year. She previously worked for Tampa-based staffing giant Kforce, where she was a senior analyst in the corporate planning department;
Donna Ross, named in-house legal counsel in August, has represented insurance carriers in workers' compensation defense cases statewide for at least the past decade;
Brian Fischer, general counsel for the firm since 2013. Fischer's legal experience comes from being a plaintiff's attorney for PEOs and staffing firms.
Having one attorney on staff with experience in defense cases and another for the plaintiff's side, says Herrig, is particularly helpful when working with clients on lawsuits and potential suits. Not many other PEO insurance entities have that in-house, which also makes it a competitive advantage. “They trade thoughts and the results are optimum,” says Herrig. “It's a unique perspective on delicate cases.”
Insurance executive Doug Lilak founded Sunz Insurance in 2005, and Herrig's first contact with the company was when he ran Progressive Employer Services. Back then, Progressive was a Sunz client.
Herrig sold his stake in Progressive in 2010. But he kept up solid relationships with a former owner of the PEO, Palm Beach Capital. The West Palm Beach-based private equity firm had been an investor in Progressive since 2004. (Progressive lives on today, under new owners and the name Progressive Employer Management Co.)
Palm Beach Capital also owned a stake in Sunz Insurance, and in late 2011 the firm asked Herrig to help fix the then struggling carrier. Problems included a large capital shortage.
Stevens, president at Sunz, has known Herrig as a competitor and a peer for years, and she's not surprised he succeeded with the venture. “Steve has a very acute intuition on how to seize opportunities,” says Stevens. “He's very decisive and deliberate in his actions.”
Herrig bought Sunz from Palm Beach Capital in 2013, and put the firm on its current high-expectations growth track. “The turnaround involved drilling down,” says Herrig. “There was a lot wrong with it. Out of all the things I've done, I'm probably most proud of this.”
By the numbers
Year Premiums % change
2012 $36.6 million
2013 $51.6 million 41%
2014 $62.9 million 21.8%
2015 $40.7 million (through June 30)
Year Surplus % change
2012 $4.47 million
2013 $8.26 million 84.7%
2014 $12.4 million 50%
2015 $15.3 million (through June 30)
Year Assets % change
2012 $37 million
2013 $54.4 million 47%
2014 $68.3 million 25.5%
2015 $79.3 million (through June 30)
Source: Sunz Insurance