Standridge’s Empire Crumbles into Pieces
by October 18, 2010 12:00 am 1,194 views
The last remaining office of Steve Standridge Insurance Inc. of Mount Ida is scheduled to be sold on Nov. 1, marking the end to one of Arkansas’ largest insurance agencies.
Steve Standridge, 54, formed the firm in 1982, and over the years expanded it by opening new offices and acquiring other agencies, sometimes continuing to operate them under their original names. At one point in 2009, SSI operated 18 offices with more than 175 employees in the western half of the state.
By March of this year, however, Standridge’s empire had crumbled.
He agreed to “retire immediately” from SSI as allegations surfaced that he falsified $4 million worth of collateral used to buy Gibraltar National Insurance Co. of Little Rock in 2009.
Standridge left the company in the hands of his two adult children, Alisha Pollock, who was president, and Jared Standridge, vice president. The children then had the task of selling off pieces of the agency.
New owners quickly changed the name of offices operating under the Standridge name, including Pollock and Jared Standridge, who bought two of their father’s offices in August for $4.1 million. Those offices are now called S&P Insurance Partners LLC, Jared Standridge said.
Jared Standridge declined to talk about events involving the company in the last year.
“The agency that we have now is going to be a strong, stable agency,” he said.
The first sale of one of Standridge’s offices came in July 2009, when Lisa Nelson bought SSI’s Texarkana Gateway Insurance. Fourteen others have closed or consolidated operations; the last one is set to sell Nov. 1.
SSI was in a cost-cutting mode in 2009, according to a Jan. 25 e-mail from Standridge to Terri Ott, assistant vice president of First Bank of Clayton, Mo. He said in the e-mail, which was included in documents on file at the Arkansas Insurance Department, that the payroll had been reduced by 80 full-time employees in the previous 18 months.
An unaudited cash-flow forecast showed his agency had $15.7 million in revenue – primarily commissions – in 2009. Commissions vary by carrier and product, and SSI never responded to Arkansas Business‘ annual surveys for the state’s largest insurance agencies list. However, that level of revenue and the number of employees suggests that SSI’s annual premium was more than $250 million, likely making it the third-largest agency in the state as of 2008.
Standridge said in the e-mail to Ott that the agency’s 2010 operating expenses would be $1.7 million lower than in 2009 and a net income was projected at $4.2 million.
“We are projecting a significant increase in our Cash Account,” Standridge wrote. “This is due to the steps taken in the last 18 months to affect the Income Statement.”
Allegations
In March the AID issued an emergency suspension order pulling Steve Standridge’s license and placing his agency under regulatory supervision.
Standridge had allegedly falsified the $4 million worth of collateral he used to buy Gibraltar, a workers’ compensation insurance carrier.
Steve Standridge didn’t return several messages left on his cell phone.
Gibraltar has been taken into receivership and is being liquidated under the supervision of Triangle Insurance Co. of Enid, Okla.
In a March 2 e-mail to employees and agents, Standridge wrote, “I come to you tonight with a very heavy heart.”
He told them about the AID’s orders.
“Make no mistake, there are always two sides to every story and we will do our best to provide our side,” he wrote. “I will be a man and handle this just as I have any other issue that has come up in my 28 years in business. If I made an error, I certainly will fix this error as soon as I can.”
The next day, Standridge decided to retire from the insurance business. In July, Standridge agreed to have his producer license permanently revoked to avoid an AID hearing on 72 counts of wrongdoing.
By March 18, Jared Standridge and Pollock had agreed to sell the assets of the agency, except for the Mount Ida and Clinton locations, according to newly released documents in Steve Standridge’s file at the AID.
The asking price for the agency would have been $15 million, but apparently they didn’t find a buyer, so pieces of it were sold off and some offices closed.
On April 21, Pollock made a plea to carriers whose policies SSI had sold.
“Steve Standridge Insurance Inc. is aware that we are behind on our account,” she wrote in an April 21 letter. “Our former owner, Steve Standridge, is responsible for this problem and we are doing everything we can to correct the problem.”
In June, the Arkansas Insurance Department accused Standridge of fraud involving $10 million worth of premium finance loans. Other legitimate business debts were estimated at $10 million, the AID said.
Pollock wrote in her April letter that proceeds from the sale of the agencies would go toward “correcting our account current situation. We are working daily to expedite this process so your company will be made whole again.”
Alice Jones, a spokeswoman for the AID, wrote in an e-mail that it was the department’s understanding the proceeds from the sale of the offices had been used “to satisfy certain debts and for normal business expenses.”
Chambers Bank in Danville had made $6.7 million worth of supposed premium finance loans to Standridge in 2009, according to an AID petition filed against Standridge. As of April, $5.9 million was unpaid, the AID said.
The bank’s owner, John Ed Chambers III said privacy laws prevent him from commenting on Standridge’s account. But he did say, “We don’t have any problems right now” with Jared Standridge or Pollock.
The AID said its file on Steve Standridge and SSI is now closed.
“I can neither confirm nor deny we have any other ongoing related investigations,” Jones wrote in an e-mail.
She also referred questions about a possible FBI investigation to the FBI, which doesn’t confirm or deny investigations agents are conducting.
Purchases
Since March, SSI’s Benton and Star City offices have sold.
In Russellville, agents Greg Standridge – who is not related to Steve Standridge – and Mark Coffman paid SSI for the right to take their customers and start their own agency.
A “Contingent Plan” dated May 11 said the SSI office in Fayetteville would be closed and its business consolidated with the Rogers office. Also, the Little Rock office would be closed and its files moved to the Conway office.
Randy Clay, who had been the general manger of SSI of Conway, said he approached Jared Standridge and Pollock about buying the Conway office.
That deal closed in August, and Clay changed the agency’s name to American Sentry Insurance.
Tommy and Christy Papasan of Danville bought five of SSI’s rural offices: Seal & Hodge Insurance of De Queen, SSI of Waldron, Arkansas Valley of Charleston, SSI of Danville and SSI of Mena.