🔒Bangor’s Cross Insurance spreads its lines throughout New England

While insurance companies strive to pinpoint the future risk of their customers, Bangor-based Cross Insurance has prospered in the unpredictable.

For much of its 57-year history, Cross Insurance has grown through expansion, merging with and absorbing about 100 operations during that time, according to its leader's philosophy of capitalizing on unexpected opportunities.

With approximately $500 million in premiums and customers that range from a hot dog cart operator on Madison Avenue in New York City to the New England Patriots, Cross Insurance has become a formidable force outside Bangor. Today, it has 33 offices, with 14 in Maine and the rest in New Hampshire and Massachusetts.

Its most recent acquisition of a Wakefield, Mass., insurance agency in July is the second merger in six months in that region and the sixth acquisition in 2011. The most recent Wakefield merger marks a milestone, notes Royce Cross, the company's CEO.

"For the first time since we've been in business, we'll do more business in Wakefield, Mass., or Manchester, New Hampshire, than we'll do in Bangor," Cross says. The out-of-state operations will produce more premiums, serve more clients and employ more people than the Maine-based network.

Overall, Cross Insurance employs about 450 people, serves more than 70,000 individuals and 25,000 businesses. The company represents about 10% of the commercial policy sales in Maine and about half that on the consumer lines.

Hard numbers are difficult to come by when ranking insurance agencies, the businesses that serve as intermediaries between insurance companies and the customers they insure. Insurance companies are required to submit financial statements to the state's Bureau of Insurance, but insurance agencies are under no such requirement, says Doug Dunbar, spokesman for the Maine Department of Professional and Financial Regulation. Dunbar can say that there are 906 licensed resident agencies in Maine, including entities that sell credit insurance and attorneys who sell title insurance.

But Royce Cross is confident about his company's standing in the state, saying Cross is larger than the next four agencies combined. "Nobody's going to debate that we're the largest," he says.

And well connected.

John Leonard, president and CEO of the Maine Employers' Mutual Insurance Co., had 25 years at Traveler's Insurance before taking the helm at the work place safety and workers' compensation insurer. He credits MEMIC's association with Cross Insurance for one of its most lucrative workers' compensation contracts: a 2008 deal with the New England Patriots. Cross provides casualty and property insurance for the football franchise.

Leonard says Cross Insurance is in the top echelon of insurance companies in New England. Growth outside Maine for MEMIC increased 30% over last year, which Leonard attributes in part to its affiliation with Cross. "As they have grown, we have grown," he says.

A growing footprint

Cross Insurance is one of only a handful of Maine-based insurance agencies that have operations outside the state.

"Maybe a dozen or so [have an out-of-state presence], so it really isn't common," says Lisa Veregge, executive vice president of the Maine Insurance Agents Association, which represents a majority of independent insurance agencies in the state.

Such a wide geographic reach allows the company access to more customers, creates a beachhead for further expansion and allows for a more diversified range of insurance offerings.

Cross's portfolio ranges from construction liability to contract bonds; watercraft insurance to workers' compensation. It provides property insurance for high-end homes and recently provided coverage for a man in New Hampshire who wanted to insure $5 million worth of horse-drawn vehicles that he had collected from around the world.

The success of the company comes, in part, from the determination and business savvy of Royce Cross and his father, Woodrow Cross, who at 94 years old remains chairman of the board and active in the company.

But the younger Cross will tell you that while his company does rigorous due diligence when making an acquisition, those acquisitions can't be predicted or planned for. Insurance agents retire, move on or seek alternatives to stay alive in the increasingly competitive insurance business.

"There's no design, it's just the way it turns out," Royce Cross says from behind a plain desk in a spartan office on Gilman Road.

Cross calls prospective mergers or consolidations "opportunities." And there have been plenty of opportunities after a somewhat slow start.

Starting at the kitchen table

Woodrow Cross, Royce's father and mentor, started the business in 1954 after moving to Bangor from neighboring Bradford, where he had worked running the family's general store both before and after World War II.

The senior Cross didn't have much work experience outside the grocery store, but he had worked with people. As a youth, he used a pony-pulled, two-wheeled cart to sell seeds from farm to farm.

After moving to Bangor, where he felt there would be greater opportunities for his family, Cross decided selling insurance was something he could do and was needed in the area.

"He didn't have any prior experience," says his son. "He just thought that insurance would be something he would like to do."

Woodrow Cross worked the insurance business from the kitchen table of his three-bedroom home, selling to farmers and friends back where he had grown up. He later expanded his home office by putting a desk in the dining room, his son says. What he earned from the insurance sales he put back into the business, building a name and reputation.

"It was years before he took money out of the business," Royce Cross says. His father worked as a laborer, including a stint at Eastern Fine Paper Co. in Brewer, to pay the bills.

Then in 1963, opportunity knocked. Cross purchased an insurance agency in Corinth and moved it to downtown Bangor in the Coe Building on, of all places, Cross Street. As a result, Woodrow Cross hired his first of many employees, a roster that seven years later would include Royce, whose first job was typing insurance policies.

Bangor proved to be a strong market and prime location for expansion over the next few decades. The company continued to acquire other agencies until the early 1990s, when the local market for acquisitions dried up.

In 1992, it acquired the Weatherbee Agency in Lincoln, then turned its attention south, reaching the Portland area in 1996. When business prospects slackened in southern Maine, Cross began looking outside the state.

"We really didn't go into New Hampshire until things slowed in Maine," Royce Cross says.

Crossing the line

In 2001, Cross Insurance made its first foray into New Hampshire. Last year, Cross merged with agencies in Somersworth, Dover and Durham and consolidated the three into one building in Somersworth.

Overall, Cross says his agency is weathering the economy fairly well and that the acquisitions have helped buoy the market, which has been soft for the past five years.

According to a PricewaterhouseCoopers report, "The insurance industry in 2011," insurance companies continue to seek efficiencies, ways to increase revenues and cut costs to meet more demanding customers, an aging technology infrastructure and new regulations.

To meet those demands in the past two years, Cross invested more than $1 million to upgrade its computer system. Because of its size and the streamlining process it undergoes with each merger, the company is able to take advantage of economies of scale, Cross says, providing customers access to a larger stable of insurance products and giving insurance companies more markets.

So far, Cross has withstood market pressure to specialize, developing a niche such as providing insurance services to bed and breakfasts or florists, as other insurance agencies have done. Rather, it continues to expand its breadth of services, offering one-stop convenience for a variety of businesses.

"The industry is changing," Cross says. "We need to be a general practitioner in order to survive."

The company's expansions have also brought greater expertise into the fold. The Wakefield operation is located a short distance from Boston, and does a lot of work with larger companies, including providing liability coverage for boards of directors and company officers. That's a type of coverage Cross had been doing a bit of, but not much.

"Since adding Wakefield, we've done a whole lot more," Cross says.

It works the other way as well. Before the Wakefield merger, Cross Insurance was one of a handful of agencies in the region that did a serious amount of sales in construction bonding, a highly specialized product, Cross says. Wakefield was developing that bonding service and got a boost from Cross even before the consolidation was closed.

With six acquisitions this year and the Massachusetts acquisitions still fresh, Cross says there is much internal organizational work to be done.

"We've done a lot in the last six months and we're perfectly content to digest what we have," he says.

But that doesn't mean he will forego an opportunity, should it crop up.

"I can sit here and tell you that 'No, I'm not going to do anything more,' but then who knows what the next phone call is and I may come back and say, 'Yeah, just do this one more,'" he says with a smile.

Cross Insurance
74 Gilman Road, Bangor
Founded: 1954
CEO: Royce Cross
Services: Commercial and consumer lines of insurance
Value of premiums: About $500 million
Employees: 450
Contact: 947-7345
www.crossagency.com

Doug Kesseli, a writer based in Bangor, can be reached at editorial@mainebiz.biz.