The wolf and his pack: starting an insurance company is like stepping on stage—frightening for many, but electrifying for others. For alternative risk veteran George L. Estes III, forming Sparta Insurance Co. fed an addiction similar to an actor's compulsion to perform. And with an all-star cast of characters behind him, he never broke a sweat

Risk & Insurance, March, 2008 by Erin Gazica

Summary

* George L. Estes III, a native of Hartford, Conn., credits his rigorous private school education, background in athletics and marriage of 37 years with teaching him vital life skills.

* Estes co-founded Discover Re in 1990 and guided the company through three changes in leadership over 17 years.

* Sparta, an acronym for Specialty Program and Risk Transfer Alternatives, launched last year with nearly $280 million in capital and an A- rating from A.M. Best Co.

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[ILLUSTRATION OMITTED]

Now this is the law of the jungle--as old and as true as the sky;

And the wolf that shall keep it may prosper, but the wolf that shall break it must die.

As the creeper that girdles the tree trunk, due law runneth forward and back--

For the strength of the pack is the wolf, and the strength of the wolf is the pack.

--from "The Law of the Jungle," by Rudyard Kipling

It's fitting that George L. Estes III, known as Geo (pronounced "Joe") to most people, connects the Kipling poem so closely to his business philosophy. This artistic soul Estes never identifies himself as the wolf, but it's clear he sees his strength coming from his "pack"--fellow co-founders Kevin Costello, president and chief operating officer, and Dawne Ware, executive vice president and chief financial officer.

This team, led by CEO and Chairman Estes, last year created Sparta Insurance Co. in Hartford, Conn. Sparta, an acronym for Specialty Program and Risk Transfer Alternatives, boasts an executive management that is thoroughly schooled in alternative risk with decades of combined experience at Discover Re.

Estes, 59, is a formidable figure with silver hair slicked back past his ears and crisp, monogrammed, cuff-linked shirts, but a certain twinkle in his eye betrays another side of him that offsets the serious one. That, and the orange tie bedecked with little bears chasing yellow butterflies.

The bit of an eccentric side is only one aspect of his energetic personality. It's easy to see why he enjoys the rush of starting new companies, and his years of experience proves that he's good at it too.

While Estes is probably most often connected to founding Discover Re in 1990, his experience goes further back. He held a number of positions at General Reinsurance Corp. from 1978 to 1989, playing a key role in the initial planning and development of the company's entrance into the alternative risk transfer market. But the roller-coaster ride didn't start until he guided Discover Re's formation.

Estes started with Discover Re when its initial venture-capital funding in 1990 was $22 million. When purchased by USF&G, it came with a price tag of $85 million. Product lines have expanded along the way to include primary, property and workers' compensation, but alternative risk transfer has always been the company's forte.

Today, the company has 300 employees and writes nearly $1 billion in business. In 17 years, Estes saw several changes in leadership, a challenge, but one that he embraced. Discover Re was acquired by USF&G Corp. in 1995, itself bought by The St. Paul Co. and, later, Travelers.

"I was in startup mode the entire time," he says. "That's called survival--17 years in four totally different cultures."

Estes was taught survival at a young age, 8 to be exact. He was sent by his father, an aeronautical engineer, to Papplewick boarding school in England, and later returned to his hometown of Hartford to attend the prestigious Kingswood-Oxford School.

Estes credits his rigorous private-school education, including years playing rugby and football, with teaching him valuable life skills of team orientation and adhering to high standards. He's also been kept in check by his wile of 37 years, Laura, who's given him an "unfair competitive advantage" considering her impressive 25-year career in investment management at Aetna.

OLD KID ON THE BLOCK

Maintaining a bit of independence along the way is probably what kept him going with Discover Re for so long, he says. But eventually, that went by the wayside. Conflicts arose as the parent companies grew and new leadership became a bit domineering.

It only helped Estes, Costello and Ware decide to go forward with a more independent model at Sparta, while maintaining the strong foundation of successes at Discover Re.

And Estes being a few decades older seemed not a hindrance in the process, but a stimulus. With the eagerness of a young wolf on the hunt, Estes found starting a company this time around much easier, he says.

"I've really been in the alternative risk business for close to 30 years," he says. "That's all I've ever done. Most of the guys who started with me are 15 feet under the sod. People call me Grandpa."

And Grandpa sure got a kick out of the headline, "A New Insurance Kid in Town," on the August 2007 article about Sparta in The Hartford Courant. The "kid" part might be a stretch, but the "new" part is accurate in several ways.

Sparta writes commercial property and casualty programs produced and underwritten by third-party program managers for middle-market customers. The company operates in two business segments--one being ART program business of primary commercial auto, general liability, property and workers' compensation, which risks are reinsured by captive companies; the other is specialty program business providing primary insurance in those four lines for insureds in groups whose exposures are fully insured by Sparta.