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Hottle and Associates Named The Independent Insurance Agents of Virginia's Most Recent "Agency on the Move"

By Danny Mitchell, Vice President Business Development

Intro: This is the first of many monthly articles featuring one of IIAV's member agencies "on the move". In today's face-paced insurance environment many agencies are participating in merger and acquisition activities. A few others are strategically growing organically. However, the feverish pace of the M&A arena is where most of the action is.

Each month, IIAV will be selecting one of the Association's agencies that is aggressively--- or perhaps, assertively --- "shaking things up" through growth. This month our spotlight is upon Hottle and Associates.

One of the very first impressions one gets upon visiting Hottle and Associates is how "professional" it feels. There is little, if any, paper about. The three-story office is nestled at 39 S. Fourth Street in the historic town area of Warrenton.

The President and CEO of Hottle and Associates is seasoned career insurance professional, Priscilla Hottle. A native Washingtonian, Hottle knows the area and the insurance landscape well. Her family actually comes from nearby Hume, Virginia, a tiny community quietly situated between Front Royal and Warrenton.

While still in high school, Hottle began working for a small Insurance Agency in Falls Church in a part time position. She was particularly fond of and actually enjoyed reading insurance policies thoroughly. It was this attention to insurance policy language detail that caught the agency principals' attention at Patterson Smith Associates and she began to rise in the ranks of the agency from a Personal Lines CSR to become Executive Vice President and COO during a twenty-five year career span. Quite an achievement was this ascension. Her career path altered somewhat when the agency was purchased by USI. Hottle was subsequently named President of the USI DC Metro office.

The policy language details are what make the policy. Understanding and firmly grasping such details really characterize the insurance professional. Hottle shares just such an example. Some years ago, one of Hottle's carriers introduced a new, broad-coverage program for accountants. Hottle had become thoroughly familiar with this product before its formal availability and, once introduced, she sold the new form to a client. When the brand new policy was issued, Hottle immediately noticed that it was void of a broad form water damage coverage previously included in the promotional information. Her client's office was in a building location that was particularly vulnerable to possible water damage. "Accounts have lots of important paper records and this coverage element was vital," she avows. Hottle phoned her underwriter who was on the road at the time. Upon hearing Hottle's concerns, the underwriter pulled off the DC-area beltway and started making phone calls. The missing coverage was quickly acknowledged by the carrier as an oversight. It wasn't simply a matter of omitting an endorsement page . . . the carrier had overlooked the coverage altogether. A manuscript endorsement was quickly secured by Hottle and a satisfied client was properly covered.

A dream of Hottle had been to create a new boutique insurance agency fashioned after the early days of the Patterson-Smith agency. As Priscilla notes, she "had fortunately grown into a position in her professional career" that she could entertain the notion of creating such an agency. Hottle's Team had, after all, met all of the expectations of the new owner, USI. Also, the daily commute from her home to the office and back routinely eclipsed two and a half hours. It had become a draining and ineffective use of her time.

Serving as evidence of Priscilla Hottle's attention to detail, while meeting her in preparation for this article in the comfort and seclusion of her third floor office, Hottle was totally distracted by the workers atop a church across the street. Being at the third floor level, Hottle was peering out of her window at eye-level with what appeared to her to be untethered roofing contractors. The perilous work being conducted on the very steep roof replacing shingles was of such concern that the conversation ceased until Hottle was absolutely convinced that the sinewy worker was securely and safely harnessed.

The new agency, Hottle and Associates, was established in Warrenton. Her daily commute was reduced to only "about seven minutes and two traffic lights from her farm" as Hottle boasts. It was February 1, 2008. Among the agency's first clients was her husband's commercial construction firm. Within six months of opening the doors with the new agency, the economy began its dramatic and unexpected downturn. Additionally, the insurance markets' softening deepened. As a result Hottle and Associates' clients were smaller than originally anticipated. Hottle exclaims that there "was, perhaps, a silver lining to this in that the sour economy may have set the stage for more potential clients to permit Hottle to bid on their business than normal." One of Hottle's strategies of "letting her show these clients how to reduce premiums in these harsh times" played into her hands.

Priscilla is quick to recognize the great bevy of carriers she has. With her role at Patterson-Smith and USI, Hottle was able to "go right to the top" to successfully negotiate with selected carriers. She also recognizes that she has been blessed with wonderful employees "from Day 1". Hottle and Associates' employees are true "ambassadors" for her firm.

Organic growth was always a part of Hottle's business plan. However, additional increases in business client numbers and premium volume by merger and/or acquisition were part of the strategy.

A merger with the Powers Thomas Insurance agency owned by H. Powers Thomas in Round Hill, Virginia was the culmination of years of friendship, business relationships and deeply-rooted trust. Hottle and Thomas have been friends for many years. "We had often chatted about working together even when Thomas was at AH&T," Hottle says. After Thomas retired from the agency, Hottle was not at all surprised that Thomas opened a new agency shortly thereafter. Hottle and Thomas "reconnected" their business relationship, wrote some accounts together and, in Hottle's words, "shared market intelligence."

Priscilla expands on this long-standing relationship by stating that "the seed was always planted" for this merger possibility. Once serious talks began, negotiations ensued for about six months. "Powers Thomas was no roll over," proclaims Hottle. The two closed the deal on August 1 of this year, but not without very careful and thoughtfully planned schedules. The day of the closing, all phones were transferred. Every client received a very positive letter about the merger. Press Releases were prepared. And, of course, the important Errors & Omission insurance issues were fully and completely addressed.

The last piece of the plan to be addressed was the modification of the website which is being worked on now.

Hottle notes that the whole process of implementing the merger transpired over a sixty-day period. The primary key to the success of the merger was, as Hottle explains, "having a carefully drafted, written plan and executing it." Nearly as critical a key is "to blend together the two businesses immediately," Hottle asserts. By "shoving" the firms together quickly, silos are avoided.

From the first day and by design, all agency services of the new Round Hill location were moved to the Warrenton office. The Round Hill location will remain as a sales office. She adds, "Keeping the Round Hill location is a flag in the sand for us."

This merger has, according to Hottle, "Been great for our team. The staff is very excited." Powers Thomas' new position and role fits him well, too. As the Executive Vice President, Thomas really is "in the game" especially in new sales development.

One of Hottle and Associates' long-time employees, Virginia Ward, is also extremely excited. As the Service Manager for the firm, Ward calls this merger "an amazing experience."

Powers Thomas had primarily one significant carrier writing approximately 99% of the book of business. Hottle acknowledges that this carrier has been exceptional to work with during this merger process. Just one month before the merger, Hottle negotiated an appointment with this carrier.

Prior to the merger, Hottle and Associates enjoyed a revenue mix with 57% in commercial lines; 12% in personal lines; and 31% in benefits business. The post-merger numbers are now much more balanced with 51% in commercial lines; 32% in personal lines; and 17% in benefits. Priscilla points out that prior to the merger her agency had experienced an impressive organic growth of 35%. Thomas had done a remarkable job of cross-selling his book . . . a factor that played a part in the valuation of the business.

As part of the post-merger strategy, Priscilla and Powers are together venturing out and meeting with the larger clients. Interestingly, Priscilla has discovered that many of her existing clients are also expressing excitement with the merger.

Thomas has a genuine knack for building great relationships with clients and prospects. "He's terrific at opening doors," boasts Hottle. From this point forward, "team selling" will be an important factor in immediate growth. Working with Jonathan Greer --- one of Hottle's producers and a third-generation insurance professional --- Thomas will be focusing more on upselling existing clients and pursuing clients with the new army of carriers at his disposal.

Are there more seeds planted in the Hottle and Associates garden? Priscilla Hottle says "definitely yes." Don't be surprised to see even more dramatic growth from this Warrenton-based boutique agency.

Phone: 540-351-0862 or Fax: 540-216-3769