Calif. Credit Union Acquires Agency

By Mark E. Ruquet

NU Online News Service, June 11, 2:32 p.m.EDT?Kinecta Federal Credit Union has acquired ApolloAgencies Inc., an independent insurance agency headquartered inTustin, Calif.[@@]

The Manhattan Beach, Calif.-based credit union did not releaseterms of the transaction.

Nader Moghaddam, president of Kinecta Financial & InsuranceServices and executive vice president with the credit union, saidthe acquisition would broaden Kinecta's insurance capacity to itsmore than 190,000 members.

Mr. Moghaddam said Kinecta saw the need to expand its insurancecapacity after some hugely successful insurance marketing campaignsshowed it needed more insurance expertise.

Kinecta's existing shop, established in the late 1980's, handled$6 million in personal lines premium and was too small to handlethe demand.

"With the number of members we have, we felt we didn't haveenough capacity to serve that membership with property-casualtyinsurance and we had to increase the capacity," he observed.

The acquisition of Apollo was a natural fit because of itsexisting relationship with five other credit unions, he said,adding that these relationships would continue.

"Apollo's management, given the fact they have dealt with anumber of credit union clients, are very attuned to what are someof the key concerns of a membership-owned organization, which ourswould be," said Mr. Moghaddam.

He noted that credit unions are not-for-profit organizations.However, they can operate for-profit organizations called CUSO(Credit Union Service Organizations), which Apollo would be apartof.

Apollo currently handles more than $30 million in premium volumefor 30,000 clients through five offices and employs 70 people, hesaid. Its underwriting is principally in Southern California andthe company works primarily with Mercury General Insurance.

"Apollo will continue as Apollo; there will be no change in thename or the management," he said. "We see this as no change intheir operations and, therefore, no change in their culture to beconcerned with. However, they will have the opportunity to markettheir product to 190,000 of our members and have a captive audienceto market to."

Tom Crandall, Apollo's current chief operating officer, willremain in that position. Agency founder and principal Mike Jacobswill continue in a consulting capacity.

Mr. Moghaddam said the credit union insurance marketing effortuses a call center format to contact customers from leads generatedover the Internet and direct mailing.

Apollo uses a more traditional approach?"high touch service,"Mr. Moghaddam called it?the direct agent to client approach. Thereare no plans to tinker with that model, he said, adding that eachbusiness would probably learn something from the other.

As far as future growth, "we are not aggressive about this andlook to do this acquisition well first," Mr. Moghaddam said. "Idon't see us turning other acquisitions down, but at this point intime I think we have enough for us to assimilate."