Experience Pays Off

If Fairmont Financial were to field a corporate softball team, it might be called the Gray Panthers.

Despite the fact that the insurer, which specializes in workers compensation coverage and surety bonds, is barely seven years old, founder Joseph G. Havlick admits to a preference for experience over youth. His senior management team is not composed of senior citizens so much as of seasoned executives who count their experience in decades rather than years.

Three key executives retired recently--two at age 72, the third a mere 70.

Havlick, taking a break last week from a board of directors meeting at the company’s new headquarters on Burbank’s film-studio row, attributed the young company’s rapid growth during a period that has been one of the insurance industry’s darkest to a low-risk underwriting policy executed by a management team recruited from forced retirements or from no-future jobs offering little recognition to long-time performers.

“I like to capture all that talent,” Havlick said. “Underwriting is almost an art. You use a lot of intuition. The only way you can pass it on is working with it. It’s not something you can get from books.”

Havlick estimated that 85% of the professionals in Fairmont’s new surety-bond operation each have more than 20 years experience in that rather arcane field alone.

“We’re giving recognition to experience,” he said. “There’s no age barrier here.”

Havlick founded Fairmont after suddenly finding himself in what appeared to be a dead-end position, he recalled. When Zenith National Insurance Co. underwent a change in ownership nearly a decade ago Havlick, its executive vice president, at the time suddenly found himself passed over by a new management team after 24 years with the Encino-based workers-compensation carrier.

“That’s the last time that’s going to happen to me,” he confided to a colleague at the time. “I’m forming a company of my own.”

Sure enough, on Jan. 1, 1978, Havlick, his then fiancee (now his wife) Tanna, and Laurence D. Black--all Zenith alumni--began operation as Fairmont Financial Inc. Black left the company this year to pursue other interests. Operating out of a small office on Riverside Drive in Burbank with “4 1/2 employees,” Havlick said, the company nonetheless ended its first year having written nearly $10 million in workers-compensation premiums, realized $271,000 in investment income and recorded a net profit of $589,000.

Five years later, Fairmont counted 325 employees on its payroll, sold $65.4 million in premiums, earned $6.3 million from investing the premium income and reported a $1.1-million net profit. Its principal subsidiary, Fairmont Insurance, has expanded operations into a dozen Western states, and the company has branched into surety insurance and premium financing, with plans to further broaden its insurance operations. The company went public in mid-1983, selling more than 1 million shares at $10 each, and now trades in the over-the-counter market.

“Some people are old at 50,” Havlick observed. “Others are young at 70. I feel that I have a 25-year-old mind trapped in a 55-year-old body.”