Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
Industry Stocks
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the March 2006 Issue of INSIGHT
©2006 Collision Repair Industry INSIGHT All Rights Reserved
Solera and GTCR to Acquire ADP Claims Services Group
Keystone Automotive Industries Reports Record Q3 Results
FIX AUTO Forms Strategic Partnership with Enterprise Rent-A-Car
William Reynolds Appointed PPG Director of Strategic Growth
Alex Sun Promoted to President of Mitchell International
Boyd Group Finalizes New Partner Agreement
Three Paint Manufacturers Found Liable in Lead Paint Case
Valspar Reports Good Q1 Earnings
USPTO Awards 7 Millionth Patent to DuPont for Bio-Based Material Invention
Progressive Direct Introduces Driving Discount Program in Iowa Based on Exact Odometer Readings
Farmers Sues Northern California Auto Glass Business for Inflated Windshield Claims
INDUSTRY UPDATE
Solera, Inc., a provider of consulting, outsourced services, and strategic technology solutions focused on the claims process, has announced a definitive agreement to acquire Automatic Data Processing, Inc.'s Claims Services Group (CSG), for $975 million in cash. CSG is the largest global provider of automotive claims solutions.
Solera, based in San Diego, California, was formed by industry veteran Tony Aquila, in partnership with GTCR Golder Rauner, one of the nation's leading private equity firms with over $6 billion of committed capital.
With revenue in excess of $410 million, an expanding global network of approximately 50,000 customers, and approximately 2,000 associates across 26 countries, CSG is a global leader in providing integrated end-to-end claims processing solutions.
The company's products and services help insurance carriers, collision repair shops, and automotive recyclers automate their core business processes, streamline their workflows with industry partners, and manage and optimize their performance.
"We view this deal as the critical first step in achieving our long term objective of enabling our customers to increase their operational visibility and profitability through the use of better data analytics throughout the claims process," commented Tony Aquila, chief executive officer of Solera. "CSG's world class associates have consistently delivered industry leading products, supported by the industry's best customer service. Its solid pipeline of next generation solutions and services will further increase the value delivered to customers across the claims process."
"GTCR's investment in Solera is an excellent example of our strategy of partnering with an industry-leading executive and then pursuing platform acquisitions as a strategic buyer," commented GTCR Principal Philip Canfield. "We are committed to ensuring that the business continues to grow by continuing to invest in new product development and by bringing innovative and unique solutions to our customers."
"The ADP Claims Services Group represents the premium franchise in the industry with the largest global reach. It serves as the ideal platform for an integrated set of technology solutions and outsourced services, all designed to drive greater value and improved efficiencies for all participants in the claims process," added GTCR Principal Craig Bondy.
The transaction, which represents the largest acquisition in the automotive claims solutions industry to date, is subject to regulatory review and is expected to close within ninety days.
o
Keystone Automotive Industries, Inc. has reported record earnings and sales for its fiscal 2006 third quarter and year to date, ended December 30, 2005.
Net income for the fiscal third quarter climbed 77.1 percent to $7.1 million, or $0.44 per diluted share, from $4.0 million, or $0.25 per diluted share, a year ago. Net sales for the same period increased 20.3 percent to $164.4 million from $136.6 million last year.
Net income for the nine months jumped 48.2 percent to $14.7 million, or $0.91 per diluted share, from $9.9 million, or $0.63 per diluted share, a year earlier. The nine-month period ended December 30, 2005, contained 39 weeks compared with 40 weeks a year earlier. Net sales for the nine months increased 10.7 percent to $448.4 million from $405.2 million a year ago (13.5 percent when adjusted for the one less week in the current fiscal year).
Same store sales for the fiscal third quarter and the nine-month period increased 15.0 percent and 11.0 percent (adjusted to reflect the 40-week period a year ago), respectively.
"These types of performance records only occur because 3,700 team members care deeply about our company, our customers, and each other. They are the ones who make it happen. Sure, management has provided a few new tools in terms of sales, supply chain, accountability, and cost initiatives, but in this business it's all about our people making it happen for their customers every day," said Richard L. Keister, president and chief executive officer.
In other company news, John M. Palumbo has resigned as chief financial officer at Keystone Automotive Industries to accept a similar position with a Los Angeles-based solar energy company. Terry Tuttle, currently the company's controller, has been named vice president finance. A search for Palumbo's replacement has commenced and an orderly transition initiated.
Enterprise Rent-A-Car, the largest rental car company in North America, and FIX AUTO Network, one of the largest providers of business solutions technology to the collision industry and to its large network of independent collision repair centers in North America, have announced a strategic partnership.
Enterprise is integrating its proprietary Automated Rental Management System (ARMS) with FIX AUTO's technology system to create a more efficient method of streamlining collision repair and rental car status reports that are monitored by insurance companies.
The ARMS(R) technology, which facilitates three-way communications between the insurers, repair shops, and Enterprise, currently is used by more than 60,000 adjusters and more than 500 insurance companies nationwide. From initiating a rental car reservation and accurately monitoring repairs to authorizing payment through electronic funds transfer, ARMS aims to reduce unnecessary delays and enhances customer satisfaction.
Moreover, Enterprise has more than 5,500 neighborhood locations within 15 miles of 90 percent of the U.S. population and has ranked highest in the J.D. Power and Associates Rental Car Satisfaction Study six times in the past seven years.
“This strategic partnership allows both organizations to benefit from the experience, expertise and relationships of the other,” said Doug Kelly, President of FIX AUTO. “In addition, Enterprise is known as the replacement rental specialist with strong relationships with the insurance industry and numerous partnerships with auto manufacturers.”
Enterprise and FIX AUTO will jointly look to integrate their technologies so that FIX AUTO Network members can significantly reduce phone calls and paperwork, which will improve their overall efficiencies.
“The insurance industry has used the ARMS application for nearly 10 years and we are excited about the opportunity to partner with FIX AUTO to provide this leading-edge technology to FIX AUTO members,” said Dave Smith, Assistant Vice President for Enterprise Rent-A-Car.
The FIX AUTO Network was established in 1997. Head-quartered in Anaheim Hills, Calif., FIX AUTO has 160 member locations in the U.S. and 155 locations in Canada.
Founded in 1957, Enterprise Rent-A-Car has more than 6,500 offices in the United States, Canada, the U.K., Ireland and Germany, and operates more than 800,000 Rental and Fleet Services vehicles worldwide.
William Reynolds has been appointed to the position of Director, Strategic Growth, Automotive Aftermarket for PPG Automotive Refinish. This announcement was made by David E. Sharick, Director, Global Finance & Business Development, Automotive Aftermarket.
Reynolds will be responsible for developing, planning and coordinating profitable global growth initiatives that support the Automotive Aftermarket business strategies. He will continue to lead the Global Refinish Marketing Council.
Reynolds has an MBA from York University in Toronto, Canada and joined PPG through the ICI Autocolor acquisition, in 1999. He recently played a key role in the devolopment of PPG's CertifiedFirst Network, the continued growth of the Platinum distributor program, and PPG’s business expansion through the sales of associated products. During his career, he has also held positions in technical, manufacturing, supply chain, corporate stores, finance, and sales management.
Reynolds will remain in the Cleveland area and continue to maintain his office at the PPG Automotive Refinish headquarters in Strongsville, Ohio.
Mitchell International has promoted Alex Sun to the position of President. Prior to his promotion, Sun functioned as the Executive Vice President and Chief Financial Officer for Mitchell.
"Alex not only brings his outstanding knowledge of the industry and its business processes to this new role, he has repeatedly demonstrated his capacity for strong, insightful leadership," said Jim Lindner, Chief Executive Officer and Chairman at Mitchell. "His keen business sense and determination to drive value to our customers will serve Mitchell and its valued trading partners extremely well."
Sun has been a member of Mitchell's Senior Executive team for nearly five years, leading Mitchell in a number of highly successful acquisitions.
Prior to Joining Mitchell International, Sun served as the Chief Financial Officer of an enterprise software company (now part of The SAS Institute). In addition, he spent approximately ten years at Merrill Lynch & Co., finally serving as Vice President in the Investment Banking Division, where he was responsible for providing corporate finance and strategic advisory services to financial services companies.
The Boyd Group Income Fund has now finalized and closed its new arrangements with trading partners that include a long term exclusive agreement to purchase paint products and a new US $13 million credit facility with a U.S. Bank. These arrangements in combination have provided Boyd Group with funding to satisfy all pre-existing trading partner obligations and refinance a portion of existing debt upon favourable terms.
Concurrent with these new arrangements the Fund's senior lender has increased the Fund's operating line from $10 million to $12 million.
"These arrangements represent a meaningful accomplishment towards our stated goal of improving our financial flexibility," said Terry Smith, President and CEO of the Boyd Group.
The Boyd Group Inc. is the largest operator of collision repair facilities in Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade names Boyd Autobody & Glass and Service Collision Repair, as well as in six U.S. states principally under the trade name Gerber Collision & Glass.
o
A jury in Rhode Island ruled on February 22 that three former lead paint manufacturers, the Sherwin-Williams Company, Millennium Holdings LLC, and NL Industries Inc., were liable for creating a public nuisance and poisoning children, and must clean up lead paint in the state of Rhode Island.
The verdict makes the companies that once manufactured lead paint liable for potentially millions of dollars in cleanup costs and community programs.
Shares in Sherwin-Williams, maker of Dutch Boy, Krylon, and Duron paints, fell 17 percent on the verdict.
The Sherwin-Williams Company issued a press release commenting on the verdict: "The jury verdict in the Rhode Island trial against the Sherwin-Williams Company is only a part of a long legal process. We continue to believe that the facts and the law are on our side. The Court still has to rule on various remaining issues before the next steps in the legal process can be determined. Additional court proceedings will be held next week. Sherwin-Williams will continue to vigorously defend itself."
The Valspar Corporation, the coatings manufacturer, has reported net income for the first quarter ended January 27, 2006 of $22,541,000 or $0.22 per diluted share versus net income of $11,698,000 or $0.11 per diluted share for the comparable period last year. This year's results include expenses of $0.01 per diluted share related to the manufacturing rationalization plan announced in 2005 and $0.01 per diluted share related to expensing of stock based compensation. Sales for the quarter increased 13 percent to $629,765,000, compared to $557,144,000 last year.
Commenting on the first quarter, William L. Mansfield, President and Chief Executive Officer, said, "We are pleased with our first quarter results in light of the challenging raw material environment. Both our Paint and Coatings segments delivered strong sales growth in the quarter with exceptional growth in our Architectural product line due to continued retail sales momentum and favorable weather conditions. Margin improvement reflects significant progress in recovering raw material cost increases experienced over the past two years."
Commenting on the outlook for the balance of the year, Mansfield said, "We expect full year sales growth of nine to ten percent, second quarter earnings in the range of $0.39 to $0.43 per share and full year earnings per share in the range of $1.45 to $1.55. These earnings estimates include expensing stock based compensation and the net cost of manufacturing rationalization."
The Department of Commerce’s United States Patent & Trademark Office (USPTO) has awarded U.S. Patent 7,000,000 to DuPont senior researcher Dr. John P. O’Brien for inventing “Polysaccharide Fibers.”
Polysaccharide fibers are “cotton-like” fibers derived from biologically based renewable resources. They are biodegradable and suitable for use in textiles. The patent issued for “Polysaccharide Fibers” is the 33,801st U.S. patent awarded to DuPont since company founder E.I. du Pont was granted U.S. Patent #590 in 1804 for a “machine for granulating gunpowder.”
DuPont and its affiliates ranked 2nd worldwide with the most biotechnology patents approved by the USPTO in 2004, according to the publication Nature Biotechnology.
O’Brien has been a polymer chemist with DuPont since 1978. He holds 15 patents in all, for his research in the areas of advanced composites and bio-based materials.
“The realm of materials science is as exciting today as it was during the fibers revolution,” O’Brien said. “USP 7,000,000 embodies many of the elements of an exciting new frontier, one that is at the interface between biological science and materials science.”
Polysaccharide fibers can be made from renewable resources such as corn. The manufacture of Bio-PDO(TM) is done using a new biological process that requires over 40 percent less total energy than alternative petrochemical-based processes. Bio-PDO will be commercially available later this year.
“Protection of intellectual property via our patent system is key to maintaining the competitiveness of U.S. industry,” said Senior Vice President & Chief Science and Technology Officer Thomas M. Connelly, Jr. “We are honored to receive this milestone patent today, which recognizes our efforts to use renewable resources and biology to create innovative products that are sustainable and can begin to reduce the world’s reliance on fossil fuels. This is another notable recognition of DuPont’s state-of-the-art efforts in developing the field of industrial biotechnology.”
Joseph R. Biden, Jr. (D-Del.), U.S. Senate Foreign Relations Committee Ranking Member: “It's fitting that it is a DuPont researcher who will receive the 7 millionth U.S. patent. For decades, DuPont has been in the forefront of some of the most significant and important innovations the world has seen. I would not be the least bit surprised to see the 8 millionth patent go to a DuPont researcher too.”
Michael N. Castle (R-Del.), Chair, U.S. House Subcommittee on Education Reform: “The announcement that DuPont will receive its 7 millionth patent for polysaccharide fibers once again proves the significance of this historic company to science in Delaware and the entire country. DuPont has led the way in creating sustainable solutions for our increasingly global science community and I congratulate Dr. O'Brien and his fellow researchers for this tremendous achievement. I have seen first-hand the innovation of DuPont through my father's time with the company and my years in government. I am certain that DuPont will continue their excellent work and dedication to cutting-edge scientific advancements. We in Delaware are proud of their great accomplishments.”
In 2003, the U.S. Environmental Protection Agency presented DuPont with its annual “Presidential Green Chemistry Award” for the company’s research leading to the development of Bio-PDO.
The Progressive Direct Group of Insurance Companies has announced a pilot program in Iowa that asks drivers to report exact mileage readings over time.
Progressive Direct has data that supports that there is a correlation between the number of miles customers drive and the likelihood of their being involved in a crash - if you drive less, your chances of being involved in an accident are lower. Progressive believes that this information, when combined with other information used to price car insurance policies, could make rates more accurate and tailored to individual drivers' behavior.
Progressive Direct customers who volunteer to participate will be asked to periodically submit odometer readings on the insured vehicle(s) they sign up for the program. Customers simply log in to a password-protected website and enter their current odometer reading. Customers will report odometer readings when buying a policy and again at each renewal of the policy, or once every six months. Customers have the option of signing up all or just some of the vehicles on their policy.
All customers will receive a five percent "participation" discount on a vehicle's total premium simply for signing up the vehicle(s). This discount will be applied to every renewal policy as long as they continue to report their odometer readings. They may also receive an additional mileage discount of up to ten percent, depending upon the number of miles driven, which will be applied to future policy terms. In all, customers could receive as much as 15 percent off a vehicle's total premium for a six-month policy. With the average Iowa driver paying about $670 a year for auto insurance, that's a potential savings of about $100 a year.
"This pilot is a win-win for everyone - all drivers can reduce their insurance costs simply by participating and, if they drive less over time, can save even more. We also have the opportunity to gather mileage data, which will help us better understand the correlation between how much a person drives and how likely they are to get into an accident," said Ian Forrester, Iowa product manager, Progressive Direct. "We're always looking for ways to more accurately price auto insurance and this program is just another way to achieve this goal."
New Progressive Direct customers in Iowa may sign up for the odometer discount within 30 days of buying the new policy. Existing customers may sign up at or within 30 days of renewal. They will immediately receive the five percent participation discount which will be applied during the current policy term. This participation discount will continue on every renewal as long as they submit one mileage reading per policy term. Then, depending upon the miles they drive during that current term, they will be eligible for the additional mileage discount which will be applied during the next renewal term. Customers can share mileage data for as many consecutive policy terms as they'd like during the length of the pilot program.
As with all of Progressive Direct's product research and development efforts, drivers have the choice of participating in the odometer pilot program. All customers who sign up will receive a five percent discount just by sharing their odometer readings and there is no penalty for drivers who log more miles than estimated. Progressive will continue to offer its traditional auto insurance policies to customers who choose not to sign up for the pilot.
This pilot is the latest effort by Progressive Direct to gather data with the goal of better understanding the correlation between driving behaviors and the risk of being involved in accidents. The company is currently testing a usage-based auto insurance discount pilot program in Minnesota called TripSense(SM), in which drivers voluntarily share driving data in exchange for receiving discounts on their renewal policy. In addition, a countrywide driving habits research study is underway that uses the same technology to gather the same kind of driving data. Customers are reimbursed $50 for voluntarily sharing six months of data from each car in the program.
Farmers Insurance Exchange has begun serving civil summons and complaints upon Redding auto glass company Onsight Auto Glass and its owner, accusing them of taking part in a scheme designed to defraud Farmers and its policyholders. The civil complaint, which is similar to prior successful lawsuits against auto glass businesses and body shops who submitted false insurance claims, seeks not only damages for the fraud allegedly committed, but seeks injunctive relief, where the courts are asked to order a halt to these deceptive practices.
Outlining an unusual and aggressive billing scam, the lawsuit details how the alleged perpetrator deliberately over-billed Farmers for services on 455 occasions. As alleged in the civil complaint, the defendant created a sham office in a remote area, so it could manipulate its billing. In fact, the only things located where the shop is claimed to exist were abandoned mines and a shack. There was no electricity, no running water, and certainly no auto glass business. Under national guidelines, automobile glass claims are paid at a premium if the shop is located in less densely populated areas. As explained in the complaint, Onsight Auto Glass created documentation that the shop was located in a remote area, so it could charge Farmers significantly more.
"This case shows the lengths people will go for money. We have seen similar scams in California and across the country. We continue to sue civilly and assist law enforcement to stop these perpetrators. This type of fraud takes advantage of a system designed to help our insureds quickly and conveniently replace damaged or broken windshields. However, by secretly manipulating the system, this type of scheme leads to millions of dollars in false claims," said Doug Ashbridge, Farmers' Director of Special Investigations. "I am proud of our Special Investigative Unit which, through persistent investigative efforts, yielded conclusive evidence that this was a deliberate effort to defraud Farmers and its policyholders."
Farmers developed evidence indicating that 81 percent of the money paid to Onsight Auto Glass involved fraud. Farmers' Special Investigations Unit confirmed its suspicions through witnesses and documented the suspected fraud. Following its investigation, it became clear that no glass work was done from the alleged shop location. By pretending to have a shop at this address, defendant was able to falsely charge more for its work.
Ashbridge concluded, "Farmers is committed to stamping out insurance fraud. There are no exceptions. Why should hard working and honest people have to pay for the acts of a few dishonest people? Farmers has teams that are designed to detect this type of fraudulent activity and uncover other types of insurance fraud scams. Similar investigations are proceeding nationwide in an attempt to curb these windshield scams."
Farmers is represented in the action by Dennis B. Kass, Manning & Marder, Kass, Ellrod, Ramirez, LLP.
Feedback
Have a comment about this article? Send Email to Editor, INSIGHT's Editor
©2006 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
INSIGHT Supports the NABC!
Do You?