“Don’t bother doing something unless you’re radically different from the competition” – Richard Branson
By Bill Rusteberg
Mike Keogh was an extraordinary man. A former Blue Cross salesman in the 1950’s, he later built an independent brokerage in San Antonio with great success. I met Mike in the early 80’s and did quite a bit of business with him.
Not satisfied brokering insurance on behalf of insurance companies, Mike decided life would be better if he could become an insurance company. Starting one is tough he thought, so buying one seemed like the logical thing to do.
He heard there was a small bank-owned credit life insurance company in South Texas that might be for sale. The owner was Clinton Manges who lived on a ranch in Freer, Texas. Mike made an appointment and drove down to Freer to make a deal.
As Mike told his story over a martini lunch (my memory may be faulty here with exact details) he convinced Manges to sell his insurance company for $250,000 with the promise not to cash his check for 60 days.
“Mike, you mean to tell me you wrote the man a hot check for $250,000?” I asked.
Mike bought the insurance company without paying a dime up front. He was confident he could convince his clients to move all their insurance over to his “new” company quickly. Mike was a confident kind of guy and to Mike there was no such thing as an unsolved problem. Failure was never an option.
He purchased GIC Insurance Company on the come and his gamble paid off. Under his ownership GIC Insurance Company quickly became a major regional player in the Texas group medical market. New business rates were the most competitive in the market. “Insurance companies work on the float” Mike told me. “If we make 2% on the float we win big.”
He paid the highest commissions in the industry which of course attracted a lot of commission hungry brokers. One I knew well was earning +$1,000,000 a year and living the good life. He branched out into the salvage business made possible by his new found wealth. Another broker made investments building a convenience store business in central Texas. The 1980’s were the Golden Years for those of us earning lucrative commissions selling group medical insurance back in those days.
A few years before Mike passed away from cancer in 1992 GIC insurance company was placed into receivership by the Texas Department of Insurance in 1989:
Texas Insurance Company Fails: GIC Insurance Co….L.A. TIMES ARCHIVES – MAY 22, 1989
Texas Insurance Company Fails: GIC Insurance Co. of San Antonio has been placed in receivership after action by the state Board of Insurance to declare the company insolvent, it was announced. The Insurance Board said GIC has an estimated 100,000 accident and health policyholders throughout the state. It was the seventh Texas-based insurance company to fail this year.
But that didn’t stop Mike. He started a TPA and moved as much business as he could from GIC to his new company. Many of his distributors (agents and brokers) remained loyal and moved their business with him.
Life is a cross roads of sorts. Mike made a deal with The Man in the Black Hat who experienced life in much the same way as he did. Who would have ever thought a former gas station attendant in Raymondville Texas would sell an insurance company to a health insurance broker from San Antonio with a hot check!
