Westfield Group

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Westfield Group

1 Park Circle
Westfield Center, Ohio 44251
U.S.A.
Telephone: (330) 887-0101
Toll Free: (800) 243-0210
Fax: (330) 887-0840
Web site: http://www.westfield-cos.com

Private Company
Incorporated: 1848 as Farmers Mutual Fire Insurance Company of Medina County
Employees: 2,000
Sales: $1.3 billion (2004 est.)
NAIC: 524126 Direct Property and Casualty Insurance Carriers

Based in Westfield Center, Ohio, Westfield Group (unrelated to the identically named Australian real estate conglomerate) is a major regional collection of eight insurance companies, serving customers in 26 states. Westfield offers a wide range of personal and commercial insurance products and services, including automobile, homeowners, burglary, general liability, business owners, inland marine, farm and livestock, fire, and fidelity and surety bonds. The firm's products are represented by more than 1,200 independent insurance agencies. In recent years, Westfield has expanded into the banking business, launching Westfield Bank, offering personal and business banking services as well as a mortgage division. Westfield also has started Westfield Services, providing data management and business processing services to insurance companies as well as outsourcing services to insurance agencies. In addition, Westfield has established Westfield Group Foundation, dedicated to positively impacting young people through sports, in particular golf. The foundation sponsors the national Junior PGA Championship.

Lineage Dating to the 1800s

The Westfield Center region of Ohio was first settled in 1820 and the town was founded in 1826, named after an early settler's hometown of Westfield, Massachusetts. During this period, Ohio quickly grew into a major agricultural state with a large number of farmers in need of fire insurance. Always a threat, whether one lived in town or in the country, fire was particularly dangerous for farmers, who lived too far from neighbors to receive help and could easily be put out of business or rendered homeless should a fire occur. There was no lack of ways for a fire to start, given the prevalence of oil lamps and later the use of straw-burning wooden threshing machines that habitually threw off sparks. The best protection, economically at least, was for farmers to pool their risks, in much the same way that they joined forces to build barns for one another. Private companies, generally based in the East, sprang up to offer fire insurance to Ohio farmers, but there was no guarantee that the well-groomed salesman driving a fine buggy pulled by a handsome set of horses would ever honor a claim. In the late 1840s Westfield Center was visited by such an insurance agent, who convinced most of the area's farmers to insure their property against fire with his company. When one of them suffered a loss in late 1847, however, and tried to make a claim, they soon learned that the salesman represented no one but himself and that they had been duped. During this period, mutual insurance companies also were being formed to offer honest coverage, but rather than paying a set premium, policyholders were assessed an equal amount at the end of the year to cover claims. Farmers and townspeople were lumped together, and because the cities suffered far less fire damage, farmers believed they were paying more for fire insurance than was fair.

There was one mutual insurance company, Western Farmers Mutual Insurance Company of Batavia, New York, that placed farmers and townspeople in separate pools. Westfield Center farmers became familiar with how this company did business when a traveling lecturer from Batavia, Andrew W. Young, paid a visit. After his talk, Young held court at the general store where he explained Western Farmers' approach to insurance. The locals were inspired to come together, despite their political, religious, and personal differences, to discuss whether they wanted to induce Western Farmers to provide coverage in their area or to form their own mutual fire insurance company along the same lines. The latter view won out handily and that same night a petition to the Ohio Legislature was drawn up, requesting a charter. It was approved on February 8, 1848, and the Farmers Mutual Fire Insurance Company of Medina County was born. Its first home was a room over the general store owned by Ben Austin. Three years later the company became known as Ohio Farmers Insurance Company, a name that would be kept for the next 114 years. (The same could not be said for Westfield Center, which for uncertain reasons also became known as LeRoy, Ohio, a name that was officially adopted in 1914; then in 1971 the town reverted to its original 1826 name of Westfield Center.)

In April 1848 an organizational meeting was held, at which time the board and officers were named. The first president was George Collier, a surveyor who in 1818 had fallen in love with the area while surveying the township and had moved his family there. The first agent the company hired was a Baptist minister named Thomas E. Inman, but no policies could be issued, according to the terms of incorporation, until the mutual had received $25,000 in insurance applications. The board was even more cautious, waiting until the total topped $50,000 in June 1848 before issuing its first policy to Jonathan Simmons, one of the founders, whose early enthusiasm was key to the company's creation. He soon replaced Collier as president of the insurance company, a post he held until 1851. The inexperienced managers of Ohio Farmers were fortunate that the company did not have to pay out any claims until a year after its formation, allowing the business to get on its feet. In September 1849, at its annual meeting, the company reported that it had 2,101 fire insurance policies in effect, covering more than $1.6 million in property. It had only paid out $752 while accumulating some $70,000 in cash and notes.

During the early decades of its existence, Ohio Farmers improved its name recognition through a pair of disparate events, helping to produce steadily increasing business. In 1854 the company honored a claim from a man named Michael Hagenbaugh, who had purchased a farm covered by Ohio Farmers but had failed to transfer the policy to his name before fire struck, destroying some of his property. The company was under no legal obligation to make reparations, but the board agreed to honor Hagenbaugh's request. Each director wrote down what he believed was a fair amount, and a check was written for the average: $327. It was money well spent, going a long way in convincing farmers that the company was honest and trustworthy. Eleven years later Ohio Farmers gained wider recognition, not from an act of generosity but by being a victim of an audacious robbery. On the night of April 3, 1865, thieves broke into the office, cracked the safe, and absconded with some $60,000 in cash and bonds, of which $8,000 belonged to townspeople who were sharing the safe. Tallied together, the company's assets at this time amounted to little more than $100,000, so the loss was substantial and occurred at a time when the company's prospects were far from assured. To reassure policyholders the company had all of its agents place placards in their windows that read, "Losses paid in cash on the spot by the Ohio Farmers Insurance Company!," flanked by towers of dollar bills. Ironically, the theft provided more in the way of advertising than the money the company lost, as the mystery of the cracked safe made good newspaper copy and the Ohio Farmers name was spread to all corners of the state, resulting in an increased demand in business and the opening of new agencies across Ohio. The legendary Allan Pinkerton was hired to investigate the matter, and although he was able to track down, to his satisfaction, the three men who committed the crime, the perpetrators were able to use law enforcement connections to avoid prosecution, and in the end Ohio Farmers recovered less than $10,000 of the stolen money and bonds. The company would have to be content with an unexpected windfall in free publicity.

Fifth President Beginning 42-Year Tenure in 1870

In 1870 James C. Johnson became Ohio Farmers' fifth president. A lawyer and former speaker of the Ohio House of Representatives, he would serve as president for 42 years until his death at the age of 93 in 1912. He saw the company through the panic of 1873 and ensuing five years of depression. Despite a significant loss of business during this period, in 1877 he led Ohio Farmers into neighboring Indiana, marking the first time the company ventured outside Ohio to do business. Within a matter of years it was operating in more than a dozen states. It was also during this period that Ohio Farmers first began using a picture of a bearded farmer sitting on a fence as its logo, a variation of which is still used today. By 1891 the company reached the $1 million mark in direct premiums. Two years later another of the periodic economic panics gripped the nation, followed by a four-year depression. Ohio Farmers also had to contend with a series of heavy losses, including a major fire in Milwaukee, and a $300,000 investment in bridge bonds that were falsely rumored to be worthless. Many policyholders lost faith in the company and either canceled their policies or opted not to renew them. Johnson met the matter head on, stuffing a satchel with cash and taking to the road in his horse and buggy to personally pay out claims on the spot in crisp, slick greenbacks. Word of his visits got around, confidence was restored, and policy renewals began to trickle in.

Johnson was replaced as president in 1912 by Frank H. Hawley, whose family members had served the company since the beginning. Under Hawley, Ohio Farmers began doing business on the East Coast, added automobile insurance, and started an inland marine department. In 1929 the company established Ohio Farmers Indemnity Company to write more comprehensive casualty coverage than Ohio Farmers Insurance was permitted to offer. Hawley held the top post for 28 years, until 1940, thus putting Ohio Farmers in the hands of just two men for 70 years and providing the kind of continuity that helped the small-town insurer to grow into a major company. To help guide Ohio Farmers through the difficult Depression years of the 1930s Johnson leaned on vice-president and lawyer Charles Don McVay, who then succeeded Johnson as president in 1940, providing even more stability in the top spot, as he headed Ohio Farmers until 1956. During his tenure, Ohio Farmers celebrated its 100th anniversary, at which point it had $10 million in net premiums and assets of more than $14 million between the Ohio Farmers companies.

Company Perspectives:

A Leader Today. A Leader Tomorrow. Westfield today is a leading regional insurance group. Our strength comes through relationships we have built with employees, independent agents, policyholders, and business partners. The product we offer is peace of mind, and our promise of protection is supported by a commitment to service excellence.

Strong Growth in the 1960s

McVay was replaced by Jean C. Hiestand, who served as president for just two years before being succeeded by Charlie E. Curtis. General Counsel since 1939 and vice-president since 1949, Hiestand was instrumental in taking steps to ensure the company's rapid growth in the 1960s. In 1963 the company became involved in life insurance, forming Colonial Heritage Life Insurance Company. In 1965 Hiestand oversaw the formation of Ohio Farmers Insurance Group, consisting of Ohio Farmers Insurance Company, Colonial Heritage, and Superior Risk Insurance Company (the name Ohio Farmers Indemnity Company took in 1959). In that same year, Hiestand stepped down in favor of the company's tenth president, Thomas B. Rowe, who had been with the company for more than 30 years. In 1968 Ohio Farmers expanded further, adding three new companies to the group—Ohio Farmers Investment Company, O.F. Equity Sales Company, and Ohio Farmers Growth Fund—to market mutual funds and other financial products through existing agents. A year later Westfield Investment Fund, Inc. was incorporated, and in 1970 it changed its name to Westfield Income Fund, Inc. Also in 1968 Westfield Insurance Company was created and joined the Ohio Farmers stable of companies. Although it was adding to its products and services, the company also was narrowing its geographic focus. The East Coast business launched in 1912 was sold in 1969, and soon the company began to focus on Ohio and other Midwestern states, and the Pacific Coast. In 1971, the group was renamed the Westfield Companies for the sake of continuity, although Ohio Farmers Insurance Company remained the legal parent company. Also during Rowe's tenure, Westfield added to the professionalism of the organization, starting the company's first formal in-house training program and launching a profitsharing plan. It was under Rowe's successor as president, Charlie Bishop, that Westfield in the mid-1970s sponsored its first national golfing event, the National Insurance Youth Golf Classic.

It was not until 1992 that Westfield made the first acquisition in its 145 years of existence, paying $89.7 million for Beacon Insurance Company of America, a move that removed a competitor and significantly expanded agency representation in Ohio. It was also the start of an extended period of expansion. At this stage Westfield generated revenues in excess of $670 million. Guiding the company through these times was the company's 13th president, Cary Blair, who assumed the post in 1986. Westfield completed another acquisition in 1995, adding the Economy Farm business in Indiana, Illinois, Iowa, and Wisconsin. Westfield also introduced niche products for home, auto, and businesses in 1995. Faced with rapid consolidation in the insurance industry, in 1998 Westfield formulated an acquisition strategy in an effort to become a major regional property-and-casualty insurer, focusing on companies in the Southeast and Midwest. To fund this expansion, rather than go public Westfield elected to exit the life insurance business, selling Westfield Life Insurance Co. to Guarantee Life Cos. for $90 million in cash and $10 million in Guarantee Life stock. In that same year, Westfield achieved some diversity by forming West-field Services, Inc. to provide outsourcing services to insurance companies and agencies, including data management and customer service.

Westfield completed another acquisition in May 2000, paying approximately $45 million for Old Guard Group Inc., a Lancaster, Pennsylvania-based insurer. It was also in 2000 that the company, after a year's worth of research, decided to replace the Ohio Farmers Insurance Group with Westfield Group. In addition, it launched Westfield Group Foundation, a charitable organization devoted to the promotion of scholarship, benevolence, competitive spirit, and ethical conduct among young people. Late in 2000 Westfield received permission from the Office of Thrift Supervision to open a federally chartered bank, like many insurers taking advantage of lowered regulatory barriers to enter the banking field. By the same token, banks were now encroaching on the traditional territory of insurance companies, making for increased competition across both industries. Westfield Bank immediately began doing business on the Internet and in 2002 opened a new home office in Westfield Center. The new bank offered checking, savings, money market accounts, certificates of deposit, individual retirement accounts, as well as a full range of business and real estate loans, and consumer, mortgage, and home equity loans. Much of the lending business was the result of referrals from independent insurance agents working for West-field Group.

By 2004 Westfield was generating $1.3 billion in annual sales. While the insurance industry continued to undergo consolidation, there was every reason to believe that West-field, now more than 150 years old, would find a way, as it had in the past, to continue to prosper and grow for the foreseeable future.

Principal Subsidiaries

Ohio Farmers Insurance Company; Westfield Insurance Company; Westfield National Insurance Company; American Select Insurance Company; Old Guard Insurance Company.

Principal Competitors

The Allstate Corporation; Prudential Financial, Inc.; State Farm Mutual Automobile Insurance Company.

Key Dates:

1848:: The Ohio Legislature charters the Farmers Mutual Fire Insurance Company of Medina County.
1851:: The name is changed to Ohio Farmers Insurance Company.
1877:: The first business outside of Ohio is conducted in Indiana.
1929:: Ohio Farmers Indemnity Company is formed.
1965:: Ohio Farmers Insurance Group is coined as the operational name for three subsidiaries.
1971:: Westfield Companies name is adopted.
2000:: Ohio Farmers Insurance Group becomes Westfield Group.
2001:: Westfield Bank is launched.