In July 2012, Century Automotive Service Corp. was purchased by Mapfre Assistance USA Inc., the U.S. division of Mapfre Group. Century now operates as a wholly-owned subsidiary to Mapfre, which has 34,000 employees, operating in 46 countries.
For Vernon Leake, CEO of Century, the decision to go this direction was a sound one. “In the industry, I think companies are looked at in three ways: as factory; as insurance companies that own and back their own obligor company; or as true third party admins that purchase insurance from insurance companies. We did this so the obligor admin and insurance would be owned by the same company; we can now provide financial strength to clients and agents by having the same company own both admin obligor company and insurance company.”
Leake has been in the industry for more than 20 years, in a variety of different roles, from provider to independent agent. He noted that he has always prided himself on the flexibility of the company – he sees this recent acquisition as an extension of that, giving Century even more options.
For now, he noted, the company will remain “Century Automotive,” with a formal announcement coming later this year, with a full advertising and branding campaign touting the new ownership and the advantages it will bring. They have waited until now because, Leake noted, they wanted to make sure they were ready. “We are expanding and growing faster than we can handle right now, so we’re making sure we’re fully prepared for a formal announcement to the market,” he said. “Prior to now, we mostly used an internal sales force, with some agents. The real growth, after the formal announcement, will be in the agent market. That will be the push.
We will still have growth in other areas, but the extreme growth will come through agent partners.”
How did this partnership happen? “It was the right place at the right time,” Leake said. “We did business with one of their affiliates, and through that existing business relationship we ended up engaging in conversations. We had been approached by several industry and private equity companies before, because we had been growing at 25-40 percent a year. We didn’t find the fit with some of the others, but Mapfre said ‘we have insurance and you have experience and a great agent network, and we want your experience and network, and we’ll provide capital and insurance backing.’”
Mapfre, he noted, didn’t have a warranty presence in the United States yet, and was looking for someone to partner with. Century wanted more multinational exposure, so, Leake noted, “we matched our experience with their A-rated insurance.”Looking Forward
Beyond the scale that being a part of Mapfre brings to Century, it will better position the company to address several trends Leake is watching. The first of those, he noted, is that the manufacturer is becoming a bigger player in the warranty space, and they are getting more aggressive about marketing their products.
“They have shown a greater interest in being in the captive insurance and participation programs for dealers,” Leake said. “In the past, manufacturers were less interested in sharing those profits with dealer clients, but the market has gotten more aggressive and demand from the franchise dealer for participation has driven manufacturers into being a competitor with providers.”
Leake is also keeping a close eye on the legal and regulatory environment surrounding his products. “The regulatory environment continues to get more strict and well enforced,” he noted, “which is good for us, but makes it a more difficult environment.” He believes the scrutiny of F&I products will only continue to get more intense, and providers need to be ready for it. This is another area he feels being part of a larger company will be a big advantage for Century moving forward.
For the future, Leake had a few pieces of advice for all agents. “Choose a partner that’s a one-stop show, one who is flexible and can provide a complete turnkey solution,” he said. “But make sure your partner is well-backed and all the pieces are affiliates. Make sure there’s a common thread to ensure long-term financial stability. Obligors can become insolvent, carriers can go out of business, and that puts agent in a real position.”