Arrowhead innovation with an entrepreneural spirit

Rough Notes, Sep 2000 by Hanavan, Brett

San Diego-based MGA expands beyond its nonstandard auto roots, broadening its niche market expertise

If necessity truly is the mother of invention, then don't tell Pat Kilkenny He believes talent, experience and instinct breed that invention. Just analyze his management style. The San Diegobased Arrowhead Group of Companies, a high-powered managing general agency is owned and guided by Patrick J. Kilkenny, a son of Oregon farmers. Kilkenny's instinct told him years ago that he would need roots in education and some of the highest-powered insurance talent in America to grow structure for his team.

His business-savvy blueprint mind and impeccable people skills have led him down a constructive path, in much the same way that a talented architect's plans result in a multi-million dollar skyscraper with all the amenities. In fact, Kilkenny and his senior-level management team now occupy such a prestigious building located among the rejuvenated high-rises and streets of downtown San Diego.

His team is high-powered, eager, visionary, entrepreneurial and approachable.

Enter diversity, the conquest for change, and the need for development and growth and you have a picture of the Arrowhead Group. There is opportunity for those who work there and dedicate themselves to the Arrowhead task. There is technology dripping from the walls. There is success there, too.

The 48-year old Kilkenny is ever the visionary. He is , chairman and CEO of the Arrowhead Group, which is one of the largest managing general agents on the North American continent. In the 16 years Arrowhead has been in existence, Kilkenny has built the managing general agent from a nonstandard, automobile-only middleman to a leading cutting-edge wholesaler and insurance writer that has diversified, spread and grown into several markets and taken on numerous products. "Arrowhead will always be a work in progress," says Kilkenny.

Kilkenny's crafting blueprint? As difficult as it seems, the concept is simple. He realizes that he alone can't do it all, nor is he the supreme expert. He maintains numerous contacts in the business, financial, educational, entertainment and sports communities. He knows insurance too and that helps. But his guiding light has been his ability to build a seasoned and trustworthy management team.

Through these 16 years and through more than a few hard times, Kilkenny, for the most part, has always shined. He surrounded himself with business associates, even close confidants from his University of Oregon days, cohorts and acquaintances who bring expertise, understanding and compassion to the table and help build a corporate structure where the whole is greater than the sum of its parts.

Kilkenny exudes enthusiasm when he recounts the history of Arrowhead and how it got to where it is today. It began as the purchase of Classified Financial Corporation. "When people would ask me what the name of the company was that I was becoming involved with, I'd say, `It's Classified.' They'd respond by saying, `Really, you can't say what the name is?' I'd tell them, `Yes I can tell you; it's Classified.' It turned into kind of a `Who's on First' type banter."

Shortly after it was founded, Classified asked him to provide leadership; and shortly after it became profitable (in 1985), Kilkenny had the opportunity to essentially buy the organization. "The only things I owned at that point in my life were my golf clubs and my television," Kilkenny says. Today Arrowhead is poised to write a projected $400 million in premium in multiple lines by year-end and works closely with 12 paper-providing carriers as well as 27 reinsurance business partners.

In the beginning, Arrowhead was focused strictly on nonstandard personal automobile coverage. In 1986 the company formally put roots down in San Diego's Sorrento-Mesa business community. It had 30 employees and was writing about $5 million in single-state premium. Kilkenny continued to surround himself with friends and business confidants who became minority investors in Arrowhead's financial stability. As the company evolved through the I980s, Kilkenny noted that what they teach you in Economics in college is true: "If you constrict capitalism, prices go up and availability slips."

By 1994, the California nonstandard auto market was becoming more competitive. Arrowhead designed what Kilkenny calls a 360 point-of attack was designed. The company put together a plan to purchase and organize body shops and, with the thought of the most efficient use of product, designed Insurance Express, a revolutionary method that established point-of sale nonstandard auto sales through Mail Boxes Etc. retail outlets in California.

"About the same time we began investing heavily in in-house technology. We designed an `Expert' underwriting system for our policies and we crafted the ability to slice and dice results into classes and territories and run reports from that data," Kilkenny says.

Then came the 1994 Northridge earthquake. As others balked and pulled in the reins, Arrowhead's vision became one of opportunity. It entered the California homeowners market swiftly at that point and has never looked back, diversifying both geographically and by product lines.