First Priority Group Signs Letter of Intent to Acquire Body Shop Video’s Business Development Group
First Priority Group, Inc. announced March 9 that it signed a letter of intent to acquire Body Shop Video’s Business Development Group (BDG) from founder Scott Biggs.
As shown in First Priority’s Form 10-KSP, filed with the SEC on March 20, the company intends to acquire substantially all the assets of BDG for $1 million cash and $1 million worth of the company’s common stock. The completion of this potential acquisition is subject to due diligence and approval by FPG’s Board of Directors and BDG’s approval of the terms of the offer.
According to Barry Siegel, CEO of FPG stated: "This alliance with Business Development Group will permit FPG to become a clear leader in providing claims and collision repair management for insurance companies and consumers by linking insurers, vehicle claims management, and collision repairers on a nationwide basis."
According to Biggs, "This merger allows the BDG to bring our current members claims volume and provide them with an avenue to better capitalize on the future growth of the industry. The merger of First Priority Group and our Business Development Group will bring together all of the critical elements necessary to take the industry to the next level."
The BDG provides training and management programs for the collision repair industry throught a variety of education, consultation and proprietary systems to maximize profitability and efficiency in the member’s facility.
Additionally, FPG announced that it believes it now qualifies for listing on The Nasdaq SmallCap Market and will apply this listing.
In light of the above and the recent market valuation of the company’s stock price, FPG has terminated discussions with Citi Growth Funds and a strategic third party investor, concerning a previously negotiated private placement issuance of the company’s common stock, as the original offering price contemplated by the parties for these securities, is no longer attractive and acceptable to the company.
FPG is primarily engaged directly and through its wholly owned subsidiaries in nationwide managed auto care services for self-insured corporate fleets, insurance companies, members of affinity groups and consumers.
(Editor’s Note: See the Investment Update section on page 15 of this issue for a review of First Priority Group’s 1997 Form 10-KSB.)
Caliber Acquires Arlington Auto Body
Caliber Collision Centers announced February 23 that it has acquired Arlington Auto Body in Arlington, Texas, according to Joe Sanders, Caliber vice president, corporate development.
"Arlington Auto Body is a long-standing collision repair operation with a great reputation in the community, as well as in the insurance industry," Sanders explained. "The acquisition of this center adds a leading provider to Caliber’s efforts in consolidating the Dallas/Fort Worth Metroplex."
Former co-owners of Arlington Auto Body, JR and Terry Newton, will assist in the transition of the facility to a Caliber Center. Terry Newton will continue working with Caliber as the center manager.
"Arlington Auto Body is a valuable addition to the Caliber family," added Sanders. "Not only is the center highly productive, it also has considerable room for expansion. We are excited about acquiring another high quality center and bringing Terry onto the Caliber team."
CarQuarters Announces Acquisition and Opening of New Facility
CarQuarters Collision Repair Centers of Natick, MA announced two acquisitions in March. On March 12, the company announced the acqusition of Westborn Collision Center, the 1997 winner of the National Auto Body Shop of the Year award. Westborn Collision, located in Dearborn, Michigan is one of the largest collision repair facilities in the country and is well known as an innovator. Westborn applies the latest technology and manufacturing management processes in its center.
Bill Haylon, co-president of CarQuarters said, "Westborn is clearly a national leader and will serve as a model facility for CarQuarters. We look for extremely talented management teams to join us, and we couldn’t be more thrilled with the addition of Kevin Mott and the rest of the Westborn team."
Kevin Mott, one of the owners of Westborn, will serve in a new role as a Regional General Manager for CarQuarters. Mott remarked, "We believe that CarQuarters’ vision for the consolidation of the collision repair industry is a winner-it is closely aligned with where we think the industry is headed."
On March 19, CarQuarters announced the opening of CarQuarters of Huntingdon Valley, its newest collision repair center in Southeastern Pennsylvania.
Bill Haylon, co-President of CarQuarters said, "We are extremely happy to bring CarQuarters collision repair service to Lower Bucks County, Eastern Montgomery County and Northeast Philadelphia. With this new location, residents of Southeastern Pennsylvania now have five (5) conveniently-located CarQuarters Collision Repair Centers."
Brian Blouch, Pennsylvania Regional President of CarQuarters said, "We have assembled a talented team to run this newest CarQuarters location. They have extensive experience with large, high quality dealer organizations and independent auto body shops."
Rob Shabe, General Manager of the new CarQuarters of Huntingdon Valley added, "We have one of the best facilities in the area and our entire staff is dedicated to meeting the needs of our customers. We provide a lifetime warranty, a guaranteed completion date and free pick-up and delivery."
The new CarQuarters of Huntingdon Valley joins CarQuarters-BTE in West Chester, CarQuarters-Marchese in Norristown, CarQuarters-Chuck’s in Sellersville and CarQuarters-Heidecker in Allentown.
CarQuarters, based in Natick, Massachusetts owns and operates automobile collision repair facilities in Pennsylvania, Michigan, Texas and will shortly announce key acquisitions in several other states.
CarQuarters was formed in September 1997 to consolidate the collision repair industry, create a superior retail experience for consumers and a national service for the insurance industry.
State Farm Reports $2.5 Billion Net Profit- After Taxes and Policyholder Dividends
State Farm’s two auto insurers, State Farm Mutual Automobile Insurance Company and State Farm Indemnity Company, announced February 25 that 1997 earned premiums of $26.1 billion, an increase of 2.3 percent over 1996. With an underwriting gain of $1.4 billion less dividends to policyholders of $692.4 million, and a net investment gain of $2.8 billion, net income from all sources after federal income taxes was $2.5 billion.
Comparable 1996 figures were: earned premiums, $25.5 billion; underwriting gain of $651.1 million; net investment gain, $2.7 billion; net income after federal income tax, $2.4 billion.
The two auto affiliates’ boards of directors announced in 1997 the return of a total of $692.4 million in dividends to policyholders in 30 states and the District of Columbia, representing the largest dividend return in State Farm’s 75-year history.
Assets of State Farm Mutual increased from $60.9 billion in 1996 to $69.4 billion in 1997, while assets of State Farm Indemnity grew from $1.3 billion in 1996 to $1.5 billion in 1997. The two auto insurance companies reported 1997 incurred claim losses and loss expenses of $19.5 billion, down from the 1996 figure of $20.2 billion.
Funds for the protection of State Farm Mutual policyholders totaled $15.7 billion at the end of 1997 and the investment fluctuation reserve rose to $11.7 billion, reflecting a very strong stock market. In 1996, the policyholder protection fund was $13.5 billion and the investment fluctuation reserve totaled $8.5 billion. State Farm Indemnity’s policyholder protection fund totaled $384.1 million at the end of 1997, up from $322.6 million at the end of 1996.
Included in the financial results of State Farm Mutual is an underwriting gain of $21.4 million on earned premiums of $897.9 million from its health insurance operations.
State Farm Mutual’s property insurance affiliates - State Farm Fire and Casualty Company, State Farm General Insurance Company, State Farm Lloyds, and State Farm County Mutual Insurance Company of Texas - reported an underwriting loss of $63.8 million on earned premiums of $8.8 billion. These results, combined with a net investment gain of $949.7 million, resulted in a net gain (after federal income tax) of $1.1 billion, compared with a $68.2 million net loss in 1996.
The policyholder protection fund for State Farm Fire totaled $3.3 billion and the investment fluctuation reserve was $1.9 billion. Comparable 1996 figures were $2.4 billion and $1.3 billion, respectively. Policyholder protection fund totals of other property affiliates at the end of 1997 were $630.5 million for State Farm Lloyds and $608.5 million for State Farm General.
The State Farm group insures about 37 million cars and 14 million homes in the United States and Canada.
Charter Insurance Selects ADP for its Direct Repair Program- ADP Enhances Website
Charter Insurance Companies announced February 23 that they have chosen Automatic Data Processing Inc. (ADP) Claims Solutions Group’s Claimsflo(TM) estimating platform and will be implementing ADP CSG’s Shoplink and Photolink software to enhance their direct repair program (DRP).
"By implementing ADP CSG’s Shoplink/Photolink, we have immediately enhanced the electronic communication avenues between our organization and our repair shops," said Richard Cantrell, vice president of claims for Charter Insurance Companies. "The decision to implement Shoplink/Photolink was a very logical one for us, since we already have a successful field estimating initiative which includes ADP CSG’s PenPro estimating system."
Charter Insurance Cos., with headquarters in Dallas, is a specialty automobile insurance carrier, writing business in Texas and Oklahoma.
ADP has also announced the debut of "CSGOnline" on the Internet.
This new site on the World Wide Web is located at www.csg.adp.com.
"With the Internet exploding in popularity, we believe that a simple-to-use Web site offering valuable information will be a helpful asset for professionals in the insurance industry and in a variety of related automotive businesses," said Mike Martone, president of ADP CSG.
From the home page, the site consists of six major content sections, which offer detailed information about the company’s range of services and products, ADP CSG’s corporate background information, a special section for members of the news media and even a career opportunities page.
CSG Online offers a wide range of background information about the various information services offered by the company and also provides detailed information about ADP CSG’s field estimating products.
"This site is designed to be more than simply a brochure on the Internet," explained Martone. "By offering our business partners the opportunity to receive free information from us regarding how our information services can help them to more efficiently operate their own businesses, we are attempting to foster a truly interactive experience for visitors to our Web site."
The new site also features some special sections where visitors can obtain very specific information, such as a page focusing on "Year 2000 Compliance" issues.
Hertz Insurance Replacement Rental Unit Opens Four Locations in Oklahoma City
Hertz Local Edition, the recently renamed local and insurance replacement car rental unit of The Hertz Corporation, has opened four new locations in the Oklahoma City area and plans to open additional sites there by year end.
Started over two years ago as H.I.R.E. - an acronym for Hertz Insurance Replacement Entity- it was rebranded in late 1997 to maximize the market recognition and strength of the Hertz brand. The four new Oklahoma City area locations, the first in that region, are the first new locations to be opened since the change to the Hertz Local Edition name.
Hertz Local Edition has over 65 locations in the Boston/New England area and the suburbs of Dallas, Denver and Los Angeles. By year-end 1998, Hertz expects to have over 100 locations in operation in the U.S.
"We see real opportunity for growth," said Joseph R. Nothwang, Executive Vice President and General Manager for Hertz’s U.S. car rental operations.
"The local market is expanding. More insurance carriers have provisions for replacement vehic1cs in their auto policies. More dealers are providing loaner cars when a customer’s car is in the shop for warranty work. And more and more people are recognizing the convenience of renting a car in their own neighborhood when an extra car is needed. All of this bodes well for the local and insurance replacement market and for Hertz Local Edition."
Hertz has a worldwide fleet of approximately 500,000 vehicles and more than 5,500 locations in 140 countries.
U.S. Fidelity Holding Corp. Affiliate Completes Acquisition of Dallas, Texas Based Estate Paint and Body
U.S. Fidelity Holding Corp. affiliate, Unistar Financial Services, LLC announced February 24 that it has finalized the acquisition of its most widely used Dallas, Texas-based auto collision repair center, Estate Paint and Body of Texas, LLC, to maximize service to its claimants and to minimize insurance claims expense. In last month’s issue of INSIGHT, we reported on their first acquisition- Mirror Finishes and Collision of Houston, TX.
U.S. Fidelity’s Chairman, Marc A. Sparks, states, "The acquisition of Estate Paint and Body further enhances our goal towards full integration of all aspects of the auto insurance industry. This 60-bay auto collision repair center is entirely self-contained. Not only does Estate repair physical damage, the company also repairs engines, radiators and transmissions. By this acquisition, we anticipate collision claims costs to be reduced by 25% to 35% in the Dallas-Ft. Worth marketplace, thus increasing shareholder value. The founder of Estate, Mr. Ash Abraham, will remain as President of Estate Paint and Body of Texas, LLC."
Also, on March 17, U.S. Fidelity announced that they had acquired a grandfathered managing general agency charter, known as American E&S of Texas, Inc. The name of the managing general agency will be changed to U.S. Fidelity Insurance Services.
U.S. Fidelity Chairman, Marc A. Sparks, states, "Our captivation of a ‘grandfathered’ MGA charter allows several benefits for our auto insurance companies to capitalize on. Locating a clean charter has been a challenge. We are very pleased to add this trophy to the full integration of our auto insurance group of companies."
Valspar Names Rompala Chairman
The Valspar Corporation has announced that its Board of Directors has elected Richard M. Rompala to the position of chairman. He replaces C. Angus Wurtele, who will remain as a director of Valspar. Rompala, 51, has served as president since joining Valspar in 1994 and CEO since October, 1995, and has led Valspar’s globalization initiatives and growth to a $1 billion coatings company.
Mr. Wurtele was chairman of Valspar for 25 years. During his tenure, Valspar grew from a small regional paint company into a major international coatings manufacturer with a broad range of products and global sales. Mr. Wurtele’s continued service on the Valspar Board will provide Valspar with continued access to his wealth of experience in the coatings industry.
If you have not yet visited INSIGHT Online, stop by today! Get industry news the day it happens. The INSIGHT Online section is accessible from the INSIGHT home page at www.collision-insight.com. When prompted, type insight for your User Name and profit for your password.
INSIGHT’s Annotated IRS Agent Audit Training Manual for the Collision Repair Industry is getting favorable reviews from our readers again this tax season. The manual can be ordered at our website, or by phone, for $29.95, including postage.
Collision repair shops are putting more dollars into advertising than ever before to increase business. While increased spending on marketing is at the top of many repairers’ list of action items for 1998, remember that one valuable marketing tool is available FREE to INSIGHT subscribers - a listing in our Internet Shop Finder Index.
As reported in past issues of INSIGHT, repair facilities across North America have found their INSIGHT Shop Finder Index listing a valuable means to increase business. Both consumers and insurers have access to the listings and usage has increased dramatically over the past year. In one instance, a California shop owner developed a referral relationship directly as a result of his exposure through the Shop Finder Index. In just three months, this generated $250,000 dollars worth of business.
Call (800) 860-2744, and we’ll fax INSIGHT’s Shop Profile form to you.
Participants in INSIGHT’s Internet Shop Finder Index also receive our monthly TrendLine Survey form. If you would like to add your voice to our surveys, make sure you call for and complete the Shop Profile form as soon as possible.
Delphi Previews Collision Avoidance System
Delphi Automotive Systems previewed its family of collision avoidance systems February 23 at the 1998 SAE International Congress and Exposition in Detroit.
The Delphi collision avoidance systems include adaptive cruise control, collision warning and collision intervention. The systems are designed to help prevent vehicle crashes through the combination of object detection sensors and automatic control of brakes, throttle, steering, and suspension.
The collision avoidance systems being developed by Delphi help drivers avoid crashes by detecting impending collisions or unsafe driving conditions; assess the threat and issuing mechanical, visual and/or audio warnings; and assist the driver during potential crash situations.
Delphi’s advanced collision avoidance systems help prevent crashes, according to Michael J. Burns, vice president and general manager of Delphi Delco Electronics Systems.
"These innovative systems effectively move vehicle safety technologies beyond crash survival systems, like seat belts and airbags, to provide a means to mitigate accidents," Burns said.
The collision warning technology being developed by Delphi consists of forward-, side- and rear-detection systems. The forward-looking radar system (FLR) is designed to increase a driver’s awareness of objects in the vehicle’s forward path.
The first forward-looking collision avoidance system available to consumers will be adaptive cruise control (ACC), which performs two functions for drivers. Using a radar sensor mounted to the front of the vehicle, ACC helps drivers maintain a proper speed and distance from the vehicle in front. When cruise control is engaged, the ACC system uses throttle control and limited braking to adjust the cruise speed, thereby reducing the need to manually accelerate with changes in traffic flow. ACC also alerts the driver through an audio warning that manual braking and/or another form of driver intervention is necessary to avoid a possible collision.
The second collision warning system - side detection - uses sensors to recognize objects on either side of the car and to alert drivers to the presence of vehicles during lane changes to avoid sideswipe accidents.
The third system is a back-up aid system designed to help drivers avoid backing into objects. This system uses ultrasonic and radar sensors mounted in the rear bumper area to alert drivers with an audio warning when objects are in their path.
Collision intervention systems go beyond collision warning by providing limited automatic assistance to the driver during potential crash situations. Such assistance may range from slowing the vehicle to a stop, to controlling steering, to helping the driver stay in the proper lane.
No word was released on when systems will actually appear in vehicles. But, expect systems to appear over the next several years, first on luxury vehicles, then moving to other classes. Good news for drivers, not so good for collision repairers.
Have a comment? Send an E-mail to: rthrall@postoffice.ptd.net
Reprinted from the April 1998 Issue of Collision Repair Industry INSIGHT.
© 1998 Collision Repair Industry INSIGHT. All Rights Reserved
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