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Sable Insurance Co. intends to become the first African-American- owned property/casualty insurance company, but the distinction Chief Executive Officer Aaron Richardson really wants is that of a mainstream insurer known for a quality product, competitive pricing and exemplary service.

Mr. Richardson, formerly president and CEO of his own insurance brokerage, Aaron Richardson Insurance Services Corp. of San Francisco, is forming the new insurance company in partnership with Reliance National Insurance Co. of New York.

Initially, San Francisco-based Sable will target public utilities, public entities, Fortune 1000 companies, select associations, minority-owned businesses and other organizations seeking to do business with a minority-owned insurance company.

Mr. Richardson, 53, holds the title of president and CEO of Sable and owns 51% of the equity and voting control. Reliance National holds the remaining 49%.

Sable intends to begin operations with more than $6 million in paid-in capital and surplus as soon as it receives a certificate of authority from the California Department of Insurance. Mr. Richardson is hopeful that regulatory approval is imminent.

"We hope to be fully operational by Jan. 1, 1997," he said.

Already well-known in the insurance industry from a successful brokerage career, Mr. Richardson said he thrives on challenges. Such a challenge is what motivated him to form the first-ever African-American-owned property/casualty insurance company.

Mr. Richardson refuses to take credit for the idea, though.

One of his clients, he recalled, had mentioned the difficulty public entities and some corporations were having fulfilling a requirement or commitment to utilize minority-and women-owned business enterprises, or MWBEs.

This client suggested that creating a minority-owned pro-perty/casualty in-surance company would be a "win-win" situation for everyone involved.

Mr. Richardson agreed it was a potentially untapped market niche.

"Many public entities and corporations doing business in both the private and public sectors are required to utilize MWBEs or have made a voluntary commitment to do so," Mr. Richardson explained.

He cited a few examples:

Federal agencies are mandated to maximize the participation of MWBEs on all contracts they fund.

Contractors doing business with the government must account for MWBE participation in their spending on all government contracts.

Fortune 1000 companies are increasing MWBE procurement as a matter of sound business philosophy.

A welcome alternative

Mr. Richardson said the creation of Sable Insurance Co. gives these entities a welcome alternative.

"The existence of a minority-owned property/casualty insurance company gives insureds a practical, straightforward means to substantially increase their levels of MWBE participation," Mr. Richardson said. "In addition, the existence of such a company provides national brokerage firms with an opportunity to assist their clients in meeting MWBE participation goals without relinquishing income."

Among the insurance companies Mr. Richardson said he will consider his competition are units of Chubb Corp., Travelers Corp. and ITT Hartford Group Inc.

"While I initially see the ethnicity of ownership as a market advantage, within five years what will really matter is whether we can compete in terms of service, price and product," he said.

Sable also aims to set itself apart through the services of its full-time marketing specialist.

Susan Spencer holds the title of executive vp of marketing. Ms. Spencer, 44, joins sable from ARISCO, where she served as vp and director of corporate communications for the broker.

"It was unusual for a company of ARISCO's size to devote that much attention to public relations and visibility," Ms. Spencer said. "But it is to Aaron's credit that he saw the value of carrying that high profile."

Reaching out to the ultimate consumer

Mr. Richardson said that because Sable is not a direct writer, it is extremely important to increase its visibility and reach the ultimate consumer so they know such an insurer exists. In turn, consumers can ask their risk managers and brokers to look to Sable for their property/casualty insurance needs, he said.

During its first five years of operations, Sable intends to reach $20 million in assets, $44 million in gross written premiums, $12 million in surplus, and more than 20% annualized return on original investment, said Mr. Richardson.

Sable will not have a financial strength rating from A.M. Best Co. until the insurer has five years of operating data.

Another of Sable's goals is to be included among the Fortune 500, a distinction only one African-American-owned company now holds.

"I've always said it's not only how large we grow, it's how we grow large," Mr. Richardson said.

Although Sable is starting small, with only three employees, the company intends to grow.

After Sable Insurance Co. becomes established as a California-domiciled, licensed property/casualty insurer, it intends to undertake "an aggressive growth plan," according to Mr. Richardson.

"Within three years, we hope to be licensed in half of the states and the District of Columbia. Within another two years, we would like to be in all states," he said.

An international presence would follow, with South Africa, the Caribbean and the Far East at the top of Sable's list.

Sable will sell its insurance products through independent agents and brokers. Risk management and loss control services will be provided by independent parties through contractual relationships with the insurer.

The company will contract with Reliance National for underwriting and claims management services. Sable also will limit its claims exposure by securing reinsurance through Reliance National, Mr. Richardson said.

Dennis A. Busti, president and CEO of Reliance National, said he was impressed from the outset with Mr. Richardson's idea to create the first African-American-owned property/casualty insurer.

"I liked the idea of a minority-owned insurance company that could attract a lot of good property/casualty business that we would not otherwise see," Mr. Busti said.

Another reason Reliance invested in Mr. Richardson and Sable, he said, is that parent Reliance Group Holdings Inc. continuously seeks solid business investments.

"Although Reliance had never before invested in a new company that was minority-owned, we felt it had the markings of a good business investment for us," Mr. Busti said.

The first meeting between Messrs. Busti and Richardson occurred in 1993. Mr. Busti said Reliance would have finalized the deal earlier than November 1995, but Mr. Richardson wanted to take time to weigh all options to ensure he had found the best possible partner.

Of the several investment partners Mr. Richardson approached with his business plan, he said Reliance was the only one where his initial face-to-face meeting took place with the president and CEO. That in itself said a lot about Reliance and the way it conducts business, he said.

Mr. Richardson, who considers himself a hands-on manager, has been involved in virtually every aspect of Sable's start-up process, including selection of the company name.

When a name search revealed that Mr. Richardson's first choice was already being used, Sable, which means African gazelle, was chosen.

"A sable is a handsome animal in Africa; one that is agile, swift and has staying power," Mr. Richardson said.

Mr. Richardson said he hopes that in addition to the company's success, Sable serves as an inspiration to others to look for new challenges to conquer.

"I hope Sable will serve as a beacon to others."

While Mr. Richardson retains ownership of ARISCO, he is no longer involved in the insurance brokerage's day-to-day operations.

Mr. Richardson in September relinquished the title of president and chief executive officer of San Francisco-based ARISCO to Ingrid Merriwether, who has managed its brokerage division since 1992.

In addition to Mr. Richardson, Mr. Busti and Ms. Spencer, other members of Sable's seven-member board of directors include: Albert J. Marino, executive vp, chief financial officer and treasurer of Reliance National and vice chairman and treasurer of Sable; Mark L. Owens, executive vp and director of marketing for Reliance National; Jeffrey A. Welikson, executive vp, general counsel and secretary of Reliance National; and Paul C. Hudson, president of Broadway Federal Bank in Los Angeles.