Business Strategies

Serving small businesses in small cities and towns
Using a small and selective general agency distribution network
Maintaining a disciplined underwriting process
Providing innovative technology to its general agents

Serving small businesses in small cities and towns
Penn-America Group, Inc.®'s commercial insureds are small businesses - such as restaurants, non-residential artisan contractors, retail stores and apartments and other multi-family dwellings - located primarily in small towns and suburban and rural areas. The 24 million small businesses throughout the United States are the engine of the American economy, representing 99.7% of all employers and 47% of all sales in the country. It is a strong, vital and growing market.

Using a small and selective general agency distribution network
Penn-America’s distribution strategy is to maintain strong relationships with a select group of wholesale general agents. This distribution network enables Penn-America to access small markets at a relatively low fixed-cost through the marketing, underwriting and administrative support of its general agents and the retail insurance brokers they serve who live and work in the small towns they target.

Penn-America develops long-term franchise value by delivering high levels of service and support. Some of the key components of the franchise value Penn-America provides to its agents include:

Direct access to senior management of the company and a collaborative, professional style of communication;
Marketing support, which includes products that are tailored to agents’ local markets; and
Contingent-profit commissions that are based on an agent’s ability to provide the company
with growing and profitable business.

For the franchise value provided, Penn-America has these expectations for each of its agents:

To be number one in their offices for the types of business the company writes;
To get the best selection of available risks and, thus, produce superior underwriting results; and
To have loyalty and longevity. Penn-America has very low agency turnover, with average agency
tenure of 10 years.

Maintaining a disciplined underwriting process
Penn-America underwrites its core commercial business on a binding authority, submit and specialty lines basis. The company closely monitors the quality of business it underwrites by reviewing new and renewal commercial policies on a continuous basis to ensure that its underwriting guidelines are being followed; and periodically auditing each agent’s office to determine if the underwriting guidelines are being followed in all aspects of risk selection, underwriting compliance, policy issuance and pricing. Further, the company provides strong incentives to produce profitable business through a contingent commission structure, which is tied to underwriting profitability.

Providing innovative technology to its general agents
Investing in technology is a pivotal business strategy. Penn-America’s Information Technology Department has focused its efforts on building functions and interfaces that squeeze the costs and boost the efficiencies of carrier-to-general agent transactions. These have included a sophisticated Internet site called PennLINK that provides automated manuals, rating systems, insurance forms and instant access to an agent’s entire business with Penn-America, from policies to claims to profitability performance; a document imaging system; online underwriting manuals, policy forms and “EZ Raters.”