Growing Colony Group's business in 2006 is a matter of focusingon client relationships with wholesale agencies, according to DalePilkington, the president of Argonaut's largest excess and surpluslines operation.

“We go to each of our agents and say, 'We understand that youapproach production as a generalist, but the reality is that ourproducts are specifically focused. So we'd like to hear yourbusiness plans, hear your expertise and get aligned with you so wecan both be successful in placing more business,'” heexplained.

The simplified approach, Mr. Pilkington said, gives agents an “?la carte opportunity” to match what they do with Colony'sexpertise, while helping Colony identify business opportunitieswhere that will allow it to rank among an agent's top markets.

But beyond being able to work with agents to place insurance inany of 10 product divisions–most of which are E&Sproperty-casualty, together with a few professional liabilitydivisions–a relatively new Argonaut pilot program at Richmond,Va.-based Colony will bring wholesale agent partners right into theinsurance company's offices.

“We'll have their people with us for a few weeks, and we usethat time to get our people involved with theirs, although it's alittle harder to reverse the process and send our people out to oneagent's office for that long,” Mr. Pilkington said. “We say we'retrying to walk a mile in their shoes,” he added, explaining that byexchanging employees, Colony seeks to understand what drives anagent's business, “so we can better partner with them and see wherethey're going.”

“We all have roles. We all believe in our roles, and we wonderabout what it takes for our agents to fulfill their roles” on aday-to-day basis, he said. He added that Colony's agents “are verygood about being stewards of our products and our success, but thatdoesn't make them us.”

“We really want to plan with them differently. We want them totell us what's working and what's not working with theirbusiness–because that's how you find out where real growth istaking place,” he said.

“If I can simplify it, when the market is hard, there is so muchbusiness out there that if you can get to it, the opportunity towrite it is good,” he added. “It does not require much creativityto do well in that environment, and it's probably a time whenyou're less sensitive to clients because you're so busy just tryingto handle the deluge.”

“That changes, of course, because the market's always going tochange. [When] you're not being force-fed business, the nextopportunity has got to come from doing a better job of being apartner for your agents,” he said.

Over the years, Argonaut's E&S segment has also experiencedgrowth through acquisitions and by expanding on existing businessclasses. Mr. Pilkington noted, for example, that the acquisition ofbusiness from Interstate in 2005 reinforced Colony's garagesegment, which was mainly focused on dealers, expanding itscapabilities to handle service operations as well.

He said that while some core products have been growing, adiversified product mix allows it to shrink some lines and stillmaintain profitable growth–that's been in the double-digits inrecent years. “Our breadth of product distinguishes us,” he said,noting that while some of Colony's products are available from anynumber of companies, few competitors have such a wide range.

Colony also has an internal business development team–consistingof professionals who aren't tasked with writing business–that worksto identify new areas for potential product expansion.

“There's no company that doesn't have that same thought. There'sno underwriter sitting at a desk not trying to think about whatelse the company can do. But the reality is, if you're taking callsat your desk or working a production deal, it's hard to be in twodifferent worlds,” he said. “So we have people isolated fromproduction–but not isolated from clients–that partner with ourdistribution people to see if there are places we should begoing.”

That initiative is just one year old, he said, noting that thebusiness development team has probably looked at 40-to-50initiatives–25 percent of which are now in production.

“You can have core business where people are very successful andthey're driving your success, but if you rely on that alone,reinforcing the core eventually becomes a problem. So we just wantthat extra look at the world,” he said.

One key benefit of Argonaut's acquisition of Colony in 2001 hasbeen Argonaut's support for unrestricted growth from a capitalperspective, Mr. Pilkington said, noting that “the only limitationwas having enough staff to do it.”

With the addition of Kevin Brooks–a former president of theNational Association of Professional Surplus Lines Offices and a28-year veteran of the industry–Argonaut expanded its E&Sbusiness in second-quarter 2005, commencing operations throughArgonaut Specialty as a unit separate from Colony.

“We write smaller business; they write the larger business,”said Mr. Pilkington, who is currently a NAPSLO board member, notingthat while Argonaut Specialty products overlap Colony's in threeareas (primary casualty, umbrella and property), Colony's averagepremium size ranges from $2,200 to $22,000, while ArgonautSpecialty's average ranges from $25,000 to $75,000.

“Larger accounts move through different agents,” he said, notingthat because “there's a natural dividing line,” there's been littledifficulty differentiating the two units in the market.

Turning to what distinguishes Colony from market competitorsoutside of Argonaut, Mr. Pilkington highlighted people andlong-term market relationships. “You have to have the products andservices as a starting point, but fundamentally our success isreally based on people,” he said, noting that spending a great dealof time on the “people part” of acquisitions has paid off.

“We're very relationship-oriented,” he continued. “And I thinkwhat's happened over time is that we've proven our durability” inthe market, said Mr. Pilkington–who has been with Colony since1993. “When a new company comes out, there may be a lot of interestin that, but if you're running a business, you've also got to havethose dependable carriers you can turn to day in and day out–and Ithink we now fit in that group.”

“I think we're a simple story,” he concluded. “We may seemcomplex because we have so many product lines, but at the heart ofit, we're very fundamental in terms of our attitude. We think to besuccessful, we should know our agents and align ourselves so thatwhat they do and what we do makes sense.”

He continued that “we also believe underwriting is a fairlystraightforward deal. You have to make good sound underwritingdecisions and not outsmart yourself,” staying focused onfundamentals.

“Most of all, we think tomorrow should be different than today,”he added. “We don't think we're a status quo group. We like tobuild and we want to build more.”