A Wonderful Life

By | October 4, 2010

McQueary Henry Bowles Troy Soars High With Faith, Texas Values and the Ultimate Angel Investor

If a creative insurance cinematographer were to capture the story of McQueary Henry Bowles Troy LLP, it might appear to be a familiar tale. That’s because although times are tough in the national economy, at this proudly independent agency “It’s a Wonderful Life.”

Speaking in a soft drawl redolent of Jimmy Stewart, chairman and CEO Bill Henry lists the many things he’s thankful for: Zero debt. Zero layoffs. A strong balance sheet. Active hiring. A corporate culture that values faith and family. And, yes, there’s an angel involved, too.

“Our company is very much centered around our faith,” Henry says. “And I think that our decisions come to a large degree from the fact that we say we’ve had an angel on our shoulder from the very start, and I believe we have. It seems like every time we’ve ever had a problem, or ever needed an employee or needed something, the right person always shows up.”

As an agile rival to Potter-like national agencies, this Dallas-based regional powerhouse continues to ring up impressive revenue. Last year MHBT wrote $255 million in property/casualty premium, with P/C revenue of $27.51 million and benefits revenue of $13.25 million. By now, its angel must have amassed an impressive collection of wings.

A Heavenly Match

“Ever since day one we’ve owned every pencil in the place,” Henry says. Day one for Bill Henry was in 1983, when he and his partner, the late Joe McQueary, left Employers Insurance of Texas to found McQueary & Henry Inc. But as a result of a merger in 1996 with Bowles Troy and Associates, the corporate line goes way back to 1926.

According to MHBT president Don Bowles, destiny also seemed to be at work in the way the merger unfolded. “Bill lost a partner in late 80s. He needed the agency value for the purposes of buying out his partner’s estate; they were 50-50 partners. That brought us together.”

Industry consultant David Hales played the role of angel in this particular match, Bowles recalls. “Every time Dave came to town he’d pull the two of us together and say, ‘Guys, you don’t see what I see: There’s not a dominant regional firm in the North Texas area and Dallas, the North Texas area, needs a large regional presence.'”

Over the years McQueary & Henry and Bowles Troy both vied for the prize of being the number one independent agency in the Dallas area. McQueary’s forte was workers’ compensation and large commercial accounts. The agency was also known for its comprehensive approach to risk management. Bowles Troy was actively involved in commercial and professional markets, and brokered personal insurance, life insurance and employee benefits.

“We shared cultures, we were comparable in size, we just operated in different markets,” Bowles says. “At the same time, the national firms were consolidating. We were able to take advantage of that market opportunity at the exact time we needed to.”

The marriage seemed to work on many counts. The new firm would be private, with no shareholders to deal with. It would be unabashedly regional, with no distant national office to report to. And the combined resources would make it possible to attract new higher-priced talent and expand areas of expertise.

Growth by Recruitment

“By getting together we really were able to kind of fill all the silos in the insurance industry for our customers: personal lines and benefits, small commercial and large commercial,” Henry says. “In addition to that we were able to put ourselves into a situation with our carriers where we were in the top two or three largest producers for probably 10 or 12 of our carriers, whereas before that wasn’t possible.”

The agency is satisfied with its pace of growth, but equally important to its team is the preservation of the company culture and values. That can make MHBT seem cautious when it comes to watershed moments. For example, a planned merger with Holmes Murphy and Associates fizzled late last year when both agencies got skittish about how the strategic marriage would affect their preferred ways of doing things.

Bowles says MHBT prefers “methodical, systematic” growth that is based on recruiting top-tier producers with an entrepreneurial spirit, and giving them wide latitude.

“We’ve hired an all-star team over the last several years,” Henry says. “We picked up who we considered to be the very best from our competitors.”

Henry adds, “In addition to bringing them on board, we’ve had almost zero turnover in key people over the last 20 years.”

People Who Like People Like Us

MHBT believes that such low turnover is testament not just to the work environment, but also to the agency’s emphasis on making sure new personnel will dovetail with other team members and company mores.

“The main key is to start out with good people in the hiring process and really evaluate their character and their morals going in, then treat them with dignity and respect,” Henry says. “We tell our customers whenever we write them, ‘You need to like the team that you’re doing business with, because chances are real good you’re going to work with them for years and years.'”

Recruits can look forward to part ownership via the agency’s Sweat Equity Program. “When a producer joins MHBT, and after they get to a certain level, if they’re what we call ‘People Like Us’ – and they like us and we like them – we don’t guarantee it, but normally we would offer them the opportunity to be a partner. I think that has done a very good job of attracting really top talent and keeping that talent,” Henry says.

These successful employee matches may explain MHBT’s consistently high rankings in the Dallas Business Journal’s annual “Best Places to Work” survey. The agency placed second in the mid-sized company category last year, and has ranked in the top five for the past five years. MHBT has also received the Alfred P. Sloan Award for its commitment to flexibility in the workplace. Flexibility applies to official titles, too: “We don’t have receptionists, we have Directors of First Impressions,” notes Bowles.

In addition to its Dallas base, MHBT has offices in Austin and Fort Worth. The Fort Worth operation is another example of the agency’s penchant for expanding by recruiting top talent. Gene Smyers had worked for a national broker for half a century when he was invited to retire. But retirement wasn’t really in his plans. In 2000, he joined MHBT and took on the challenge of building the Fort Worth operation from the ground up. This past February he finally did retire – at age 83.

A Good Spot for Weathering the Economic Storm

North Texas has been something of a safe harbor during the Great Recession, according to the MHBT team.

“We’re very fortunate in terms of the current economic downturn,” Bowles says. “We actually had our recession/depression from 1987 to 1992 or ’93 in Texas, and as a result of that our economy is much more stable and also much more diversified in most cases than the national economy. And so in some ways we have not been as adversely affected as some. That said, we’re certainly feeling it. We do a lot of work in the construction area, construction insurance and risk management area, and our construction clients are certainly feeling the slowdown.”

And yet, “There are a number of areas where we have the beginnings of opportunity,” Bowles says. “The North Texas area is a great area for public companies and we’re real interested in expanding our involvement, particularly in the executive professional products for those companies: insurance coverages and risk management practices for directors and officers. We see the possibility of really being market leaders in that area. In energy, health care, biotechnology and technology, we’ve begun the process of building relationships.”

Against the backdrop of improving opportunities, Bill Henry remembers 2008 as a time of “fear and shock and amazement” in the national economy and the industry.

“Had AIG gone under, I hate to think what would have happened to the insurance market,” he says. “I’d say things are much better as far as the carriers, but I am concerned about where the market’s going. You know, we’re basically six years plus into a market cycle where rates have been going down double digits or at least close to double digits. On the one hand you like that for your customer, but on the other hand you know that it just can’t continue without it causing solvency problems with the carriers.”

When Washington Messes With Texas

Moving forward, the MHBT leadership sees the economy encountering tax and regulatory roadblocks from Washington. The roll-out of the new health care bureaucracy is one such example.

“It would be hard to be in this industry and not expect that the health care bill will affect us,” Bowles says. “There’s going to be a real premium placed on wellness for one thing, managing claims in the work environment before they occur.”

New mandates – such as pre-existing condition rules and allowing children to remain on a parent’s policy until age 26 – will also create additional exposure. “There’ll be a real focus on market conduct, so that the ability of insurance companies to underwrite the risk will be more limited.”

But the changes also present new opportunities. “We think with all the chaos and confusion … our customers and prospects are going to be looking for expertise and people who can help them navigate through all the changes,” Henry believes.

Increases in tax rates will also have an impact, particularly those likely for capital gains. “It sounds like the Bush tax cuts will go away, so I think you’re going to see some motivated people wanting to sell before the end of this year,” he says.

Smaller Agencies May Need an Angel Too

“On the benefits side of the equation, I think there are a lot of one-man-band operators out there, small benefit shops that will not have the money or resources to work in this environment,” Henry predicts. “And I think some of those people might be looking for somebody like MHBT that has a very strong presence and a very strong balance sheet and a lot of resources to partner up with. I think you’re going to see a ton of mergers and acquisitions.”

The MHBT team believes the agency is well positioned between the national brokers who have been buffeted by market turbulence in the past few years and smaller competitors who are foundering.

“We’ve actually been adding people and adding services internally to support our customers with loss control and claims and risk management, and I see us continuing to do even more of that in the future,” Henry says.

“And when we see our competitors cutting back on those areas and cutting back on people, you got to think that at some point in time that there’s no way they can continue to give the level of service their customer’s going to require.”

“And if they can’t, we’ve prepared ourselves to be an alternative,” Henry adds

If all goes according to script, it could be an outcome worthy of Frank Capra: Out of industry adversity, character is tested, opportunities emerge, and a story of triumph unfolds.

With a little help from above.

Top 100 Agency Profile
Rank: 41
Agency: McQueary Henry Bowles Troy LLP
Year Founded: 1926
Headquarters: Dallas, Texas
Additional Locations: Fort Worth and Austin, Texas
Principals: Bill Henry, chairman and CEO; Don Bowles, president; Carla Sans, executive vice president/chief operating officer; Dan Browning, senior executive vice president
2009 P/C Premiums: $255.00 million
2009 Other than P/C Premium: $220.00 million
2009 P/C Revenue: $27.51 million
% Commercial: 62%
% Benefits: 34%
% Personal: 4%
Merger/Acquisitions: 1996 – McQueary & Henry Inc. merged with Bowles Troy & Associates to create McQueary Henry Bowles Troy LLP
No. of employees: 200+
Insurers represented: 150+

Topics Texas Agencies Talent Training Development Property Casualty Risk Management

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