American Equity founder has staying power
June 25, 2013 by Victor Epstein
West Des Moines resident Dave Noble still leads at 81
The prospect of retirement does not agree with Dave Noble, the founder of West Des Moines-based American Equity Group.
He said he started the fast-growing insurance company with $160 million on Dec. 15, 1995, at the age of 64, after being retired for all of three days. Today, it has $37 billion in assets, about 400 employees, about 500,000 policyholders, a distribution network that includes more than 25,000 independent insurance agents, and an executive chairman who still comes to work three or four days a week at age 81 and plays an active role in the hunt for big deals.
“Insurance is not work to Dave, it’s his pleasure,” said longtime friend William C. Knapp, the 87-year-old chairman emeritus of West Des Moines-based Knapp Properties. “He’s still got a competitive fire in his belly. He’ll stay right there in the office until the day he goes and love every minute of it. Don’t look for him to retire. He’s never going to retire — I can tell you that.”
Noble has the unusual distinction of having led two different insurance ventures to success and helping pioneer the sale of fixed indexed annuities, which now boast U.S sales of $34.1 billion. The investment vehicle, which generated only $200 million in sales as recently as 1995, is favored by financial planners seeking to provide retirees with a fixed minimum return that increases as financial markets climb.
Noble was chief executive officer of the Statesman Group from 1982 to 1994, when the Des Moines-based insurer was acquired by Conseco Inc. for $350 million. He purchased two blocks of insurance from Statesman that were heavy with National Guard policies after the sale, as well as the state licenses of Century Life Insurance Co., and used them as the initial basis for the insurance company of his dreams.
For him, that meant a meritocracy staffed by people who knew how to get things done. It also meant championing fixed indexed annuities and carving out a niche as a company that prizes customer service.
“For the most part, the first 25 people were all former No. 2s — the people who make things happen,” Noble said.
John Matovina, chief executive officer of American Equity, said he was flattered when Noble asked him to join the new team. Statesman’s former chief financial officer also was amazed that his former boss wasn’t retiring.
“You figure he’s off to retire at Longboat Key, (but) his passion is the insurance business, and he’s clearly not ready to retire,” Matovina said.
About 40 percent of American Equity’s $1.02 billion market capitalization is held by American Equity employees, according to Noble. He is the single largest individual shareholder with 2.17 million shares, which account for about 3.39 percent of all common shares. The stock, which trades under the “AEL” ticker, closed down 14 cents at $16.01 per share Friday and is up $3.80 or 31 percent so far this year.
Fortune Magazine recognized American Equity as the 18th-fastest growing company on the planet last year.
“Standards are high and rewards are high,” Noble said of working at American Equity. “It’s not for everybody.”
Noble is widely viewed as a consummate insurance professional within Des Moines, one of the industry’s leading hubs that employs 24,100 people. He’s been in the industry since 1952, was named to the Iowa Insurance Hall of Fame in 2004 and has helped shape many of the Iowa insurance industry’s top local leaders.
They include Iowa Insurance Commissioner Nick Gerhart, who helped him oppose an effort by the U.S. Securities and Exchange Commission to regulate fixed indexed annuities as if they were securities beginning in 2008.
GuideOne Insurance Chairman and CEO Jim Wallace worked closely with Noble for nine years as an auditor assigned to the Statesman Group by the Ernst & Ernst accounting firm, now Ernst & Young. He’s now chairman of the Greater Des Moines Partnership.
“I kind of grew up with him,” Wallace said of Noble, noting that they flew all over the country together on business for several years and probably shared more than 200 dinners. “He had a ridiculous work ethic. He would work all day and work all night, and dinner was always a working dinner.”
“He never quits, and he never panics when something bad happens,” Wallace said. “The biggest thing he taught me was to relax when adversity arises. I also know from him to surround myself with smart people, and that even when a problem seems insurmountable you can find a solution.”
Despite Noble’s high expectations for his staff, many of his initial hires are still with the company 18 years later. He has a reputation for being a perfectionist who simply will not tolerate mediocrity or workers who think they can retire in place, while treating those who rise to his demanding professional standards like family.
About a quarter of American Equity employees have been there a decade or more. And the untimely death a year ago of CEO Wendy Waughman, 51, had a profound impact on Noble, who had chosen her as his successor.
“Dave is passionate about his business and his employees, and they are very loyal to him,” said Jim Brannen, chief executive officer of FBL Financial Group.
There’s a family feeling among the top staffers at American Equity, and it’s not uncommon for them to reach in without seeking permission to tweak Noble’s tie or shirt collar. Despite his sometimes fearsome reputation, veteran staffers seem to deal with Noble more from a position of veneration and affection than fear.
Noble has scaled back his responsibilities in recent years. He now serves solely as executive chairman of American Equity’s board of directors. But he simultaneously held the positions of chairman, CEO, president and treasurer from 1995 until Jan. 1, 2009.
“He’ll disagree with this, but he is a very demanding person — he demands excellence,” said Executive Vice President Debbie Richardson, who has worked with Noble for 28 years. “He has such a passion and drive.”
“When people come here they tell us that they’ve never worked anyplace like this before,” she said. “They know management cares about them. We’ve never had a layoff — ever — even at (Statesman).”
Noble is renowned within insurance circles for borrowing a cellphone during meetings with policyholders and insurance agents, and calling his own customer service team just to show that his promise that all calls will be answered by a human being within 120 seconds is for real.
The son of a West Des Moines cattleman slammed his fist into his own thigh during a recent interview with the Register when such a call failed to draw an immediate human response. Richardson reminded him of his own 120-second performance metric.
The call wound up reaching a customer service staffer within nine seconds.
“I have no interest in being mediocre,” Noble said.
Gerhart was an attorney at American Equity from 2003 to 2010. He started there as associate general counsel and finished as vice president for compliance communications, and was present at the meeting where Noble began his practice of calling customer service at American Equity on strange phones about a decade ago. Noble was at the microphone and had just taken out his cell to call customer service, Gerhart recalled.
“Someone in the audience said, ‘Hey, they know your number,’ and Dave said, ‘OK, give me your phone,’ ” Gerhart said. “And I thought, ‘This could be really good or it could be really bad,’ (but) it went off perfectly.”
Noble is also distinguished by his willingness to stand up to regulators when he thinks he’s right. He has tangled with them repeatedly, and often successfully.
In 2008, he helped form the Indexed Annuity Coalition — now known as the Indexed Annuity Leadership Council — after the SEC tried to regulate fixed indexed annuities as securities under Rule 151A. The move was prompted by abuses, largely by other annuities issuers, in which older purchasers were locked into the investment vehicles without fully comprehending the substantial financial penalties they faced for early withdrawal. Customers put a set amount of money in an annuity, allow the insurers to invest those funds for a set period of time, and then begin drawing a stream of income.
The U.S. Court of Appeals decided against Rule 151A in July of 2010 in a case called “American Equity Investment Life Insurance Company, et al. v. Securities and Exchange Commission” on the grounds the SEC had not proven the new regulation would promote efficiency, competition and capital formation.
“Dave Noble led the charge,” said Jim Poolman, executive director of the Bismarck, N.D.-based Indexed Annuity Leadership Council.
Noble paid a $900,000 civil penalty to the SEC just a few months earlier in 2010, in the middle of the battle over fixed indexed annuities, after the agency alleged that American Equity didn’t fully disclose his ownership of a financing company it acquired.
Noble’s 52-year-old daughter, Cindy Bento, said that his passion for insurance and pursuit of perfection were evident even in her youth. He began taking her to the office on Saturdays when she was 6 years old. He had little interest in television, she said, and would sit in an adjoining den while she and her two siblings watched their programs.
The den had two phones — one tan and one red. The red phone was a direct line to the office the children were warned not to touch.
However, Bento said her daddy is actually more soft-hearted than most people realize, and his commitment to insurance is driven by that sensitivity and his concern for the people the insurance industry safeguards and serves. That’s one of the reasons he acquired the National Guard insurance business from Conseco and has retained it, she said. He felt a responsibility to ensure it was handled properly, she said.
It’s also the reason American Equity sends out death checks overnight after learning a member of the National Guard has died — even before receiving the death certificate, Bento said. It follows a similar procedure with firefighters.
“He used to tell me a story — and this is where I learned that he really loved the people side of the insurance industry and not just the investing side — about delivering a death check to a young widow with children who had just lost her husband in a farming accident. I’ve always been impressed by how good that experience made him feel and by how important he thought it was.”
When asked if he would have lived his life differently if he could do it all again, Noble said he had no regrets.
What would he change?
“Very, very little,” he said. “I know darn good and well and good I didn’t make a mistake (by going into insurance).”
Dave Noble, chairman of American Equity Group in West Des Moines, started the company in 1995 after being retired for three days. / David Purdy/The Register
Dave Noble
Age: 81
Hometown: West Des Moines
Birthplace: Waukee
Title: Executive chairman
Company: American Equity Group
Education: Graduate of Valley High School and Drake University
Family: Wife, Margaret Noble; three children and five grandchildren
What people are saying about Dave Noble and American Equity, which trades under the ‘AEL’ ticker.
“Some people can be successful once, but it’s very rare to do it twice. He did it twice and he’s one of the best businessmen I’ve ever known. And one of the reasons is because he’s always trying to be better.” “I really admire him as a businessman because he took two companies to the top, and there’s not too many people who can be successful twice like that. Most can do one, but not two.” — William C. Knapp, chairman emeritus of West Des Moines-based Knapp Properties
“David Noble has been an iconic figure in Iowa insurance for a very long time. His leadership and entrepreneurial spirit have made AEL successful through the years.” — Jim Brannen, chief executive officer of FBL Financial Group, a West Des Moines-based insurer
The Dave Noble way means that “the agents and policyholders come first,” he said. “If American Equity ever loses that principle of service we will have lost our way. That’s what defines this company.” — John Matovina, CEO of American Equity
“American Equity has found a way to not only use agents as distribution, but to show them that they are not just a means to an end — but valued partners,” she said. “That is one company that I’ve never received a negative complaint on from agents. In fact, I’ve never heard more praise.” “Based on the feedback that insurance agents give me, my contacts in that home office, and my own experiences with AEL, I’d say they’ve created an insurance company that is an extension of their own family.” — Sheryl Moore, president and CEO of Moore Market Intelligence and AnnuitySpecs.com
“Dave understands the importance of working in partnership with the independent agents and brokers who represent his companies in the field. He has always taken pride in his relationship with the professionals who do the actual selling of insurance. He is a strong advocate of great customer service, and getting real people when you call, which so many other business models have vacated today.” “Iowa has been known for over 100 years for being the home of many of the country’s brightest insurance leaders, and it is Iowans like Dave Noble who have helped our state earn that reputation. Dave Noble’s creativity, enthusiasm, and vision have left a big footprint on the Iowa insurance industry. His impact has been huge, and his leadership style will be a guide for the future of those following in his footsteps.” — Bob Skow, CEO of the Independent Insurance Agents of Iowa
“At a time when most people would retire, Mr. Noble started an insurance company from scratch and built it one customer at a time. Mr. Noble built the company around simple principles: hire great people, offer the best service by always taking care of customer needs, and invest company assets prudently. Those simple principles, combined with his vision for the company and his demand of excellence, made American Equity what it is today.” — Nick Gerhart, Iowa Insurance Commissioner
“Most people would sit on a beach after (selling a company) and enjoy the money. He started an annuity company.” — GuideOne Insurance CEO Jim Wallace
“He’s not afraid of a fight. He’s basically sued the federal government successfully twice. The first time dates back to when the Statesman Group bought two distressed banks and rehabilitated them. Then it passed a new rule that changed the way banks did their accounting and made the banks we had bought insolvent, and he sued and won.” –Ron Grensteiner, president of the American Equity Investment Life Insurance Co.
Dave Noble: Leadership Tips
People People are what make the company successful. Noble looks for individuals who understand the need for excellent customer service. “We want people who are hardworking and honest,” he said. “If the people are successful, the company is successful.”
Service “Customer service is our difference maker,” Noble said. “If the product is similar, customers will go where they can have a positive customer service experience. In some cases, people may pay more or receive less benefit because of the value of receiving excellent customer service.” “Good customer service is not rocket science. It is having common sense, a positive attitude, and showing respect and appreciation for your customer. At American Equity, it’s the little things, like answering the phone by a live voice.”
Honesty “If we are recruiting someone in the financial service area, success of the individual is the success (of) the company. Attitude is a part of this and also honesty. Obviously some experience in the insurance industry is helpful; but we’re looking for people who will fit into our culture. That culture (makes) sure all parties in the transaction win and backs it up with exceptional customer service. “Honesty is not only in the business world, but it also includes family and all relationships. In working with people this is a necessity. Honesty will then ultimately affect the bottom line.”
Managers Surround yourself with good management staff. “I look for commitment to success, service, experience, and loyalty to the company and its associates,” Noble said. Work ethic Create a culture that prizes people who are willing to work hard.
http://www.desmoinesregister.com/videonetwork/2492220949001/Dave-Noble
