ONE ROOT SYSTEM THE REDWOODS GROUP 2009 COMPANY REPORT THE REDWOODS GROUP | 2009 COMPANY REPORT 3 Company Background The Redwoods Group, a privately held, socially conscious Redwoods believes community company, provides property and casualty insurance service and charitable giving underwriting and risk and claims management services are essential priorities of a socially responsible business. to YMCAs, Jewish Community Centers (JCCs) and nonprofit Our giving and service, as well as resident camps across the nation. The company’s business our business success, resulted in and social mission is to protect and improve the quality several accolades in 2009. of life in the communities it serves…to Serve Others®. Privately owned by company management, Redwoods was formed in 1997 by long-time colleagues experienced in serving complex customer United Way groups. The company has developed extensive expertise in support of of North Carolina child-serving, faith-based organizations and is known for striving to create a culture of safety at YMCAs, JCCs and nonprofit resident camps to Redwoods was one of 33 companies prevent accidents, injuries, drownings and abuse. nationwide to be honored as 2009 Best Places to Work in Insurance by Redwoods conducts its business in partnership with leading national and international insurance companies that assume the insurance risk. Business Insurance magazine and the Redwoods acts as a managing general underwriter that prices policies Best Companies Group. Redwoods and provides risk management and claims handling services. earned B Corporation status in 2009 Company revenue comes from the commissions and fees paid by and became Green-Plus Certified. the risk bearers on each insurance program for the insurance-related The Greater Raleigh Chamber of services provided by Redwoods on their behalf. Insurers support Commerce gave Redwoods its Smith Redwoods’ efforts because our track record and business model indicate a strong likelihood of outstanding return on the insurers’ capital. Seal of North Carolina Sustainable Business award. The Triangle Business Most companies focus solely on Journal named Redwoods its 2009 making a profit. Serve Others® is Green For-Profit Business of the at the top of Redwoods’ unique business model, proven to be Year. Redwoods won United Way successful over a long period of North Carolina’s 2009 Spirit of of time. A key component North Carolina Award for its overall is market selection. We select markets that are commitment to United Way and the underserved and whose community. Redwoods also earned decision makers will United Way of the Greater Triangle’s resonate with our social focus. top 2009 award – Best Overall (Campaign) Performance. For more information, visit www.redwoodsgroup.com. 4 THE REDWOODS GROUP | 2009 COMPANY REPORT ONE ROOT SYSTEM THE REDWOODS GROUP | 2009 COMPANY REPORT 5 Letters from Management A Letter from the CEO HOW ARE YOU CONNECTED? Our theme for this year’s report, One Root system, required that we – like Elfaba in System, is a concept we borrowed from Wicked – defy gravity in our business the majestic redwood groves. These groves practices. look like many individual trees, but they have one root system that connects and Conventional wisdom would have told The giant redwoods nurtures all of them below ground… us to… hidden, but there. • Lay off staff, remain upright – while • Cut employee benefits, Similarly, the connections we have to those around them fall • Suspend charitable contributions, each other and the events around us • Replace AIG as a partner after their aren’t always obvious on the surface, yet – by intertwining their financial troubles, and, they are still there. • Postpone developing The Redwoods roots with the roots of In 2009, a global economic meltdown Institute online training platform (a proved that we are all part of one root way to more broadly share our safety their neighbor, thereby system. The actions of a few affected knowledge with our customers – at no many families, organizations and cost to them) supporting one another communities around the world. You likely felt it and, by reviewing this But conventional wisdom doesn’t when the winds come. report, you’ll see our company reported understand that laid-off employees can’t When one is under the a $389,870 loss. We felt it. pay their mortgage or send their kids to college. It doesn’t get the urgency of It’s important to understand that we training more people to recognize the direct pressure of the chose to lose money in 2009, as it’s only warning signs of child sexual abuse, so wind, the others help one criterion we use to measure success. that we catch it early enough to protect We could have made decisions in 2009 a child’s innocence. It doesn’t realize that to hold it in place, not that would have turned that loss into a those suffering from empty stomachs, financial profit. But we could have done so failing schools and inadequate shelter allowing it to succumb only at the expense of something of equal can’t wait for the market to turn around. value, our social profit. to the destructive To defy the gravity of conventional Ours is a business model borne out of a wisdom in the bad times requires forces of that wind. conviction to do things differently. We defying it in the good times as well. define ourselves, not by increased For us to sustain our commitments . shareholder value, but by our place in a through 2009’s challenges, we had to be larger root system…one in which we are financially conservative in years past. We responsible to our employees (and their had to stick to our principles no matter families), our customers (and the people how great or how poor the market condi- they serve) and our global community – tions. And because our postponement of as well as to our owners. gratification in years past meant that we had money in the bank entering 2009, So responding to a global recession, we didn’t have to listen to conventional sinking insurance rates and aggressive wisdom. competition, all while protecting our root 6 THE REDWOODS GROUP | 2009 COMPANY REPORT Instead, we… We generated organic growth by offering • Refused layoffs, a new Workers’ Compensation product and • Intensely and responsibly looked at by enhancing our offering of Directors and our long-term partnership with AIG, Officers coverage to existing customers. We concluding that the insurance side expanded our market footprint, deepening of their operation was still the best our relationships with Jewish Community choice for our customers, Centers and introducing a new program to Ours is a business model serve not-for-profit resident camps beyond • Sustained charitable giving at more the YMCA and JCC communities. This than $700,000, borne out of a conviction revenue diversification helped us weather • Developed and launched The the unprecedented fifth straight year of to do things differently. Redwoods Institute to provide risk falling rates in the insurance market. management education and training We define ourselves, not online, on-demand to our customers, We executed better on our compara- • Served almost 4,000 hours in our tively sophisticated insuring model. We by increased shareholder community through our employee deepened our engagement with our service requirement (40 hours/year of brokers, customers and, in many cases, value but by our place in a volunteer time, fully compensated), their volunteers, enabling us to keep our • Built homes with our own hands in intimate relationships intact. We delivered larger root system…one in Durham, NC, and Kawama, Zambia, in ever-better operating guidance to our partnership with Habitat for Humanity, customers more consistently and more which we are responsible and, efficiently, through the use of technology. to our employees (and their • Kept all employee benefits intact, in- cluding our health benefits and college In fact, our new distance learning efforts families), our customers funding (giving out 16 scholarships have spread key safety messages through for employees’ children and providing online trainings, YouTube videos and social (and the people they serve) 50% matching investments for college media to more staff than ever before. savings funds). And we continued to perfect our early and our global community intervention and empathetic claims case We don’t do what everybody else does management, which helped our custom- ers, their members and their staff to heal – as well as to our owners. Frankly, both the wisdom and the dif- faster and more completely – at less ficulty of what we do was driven home to expense to our risk-bearing partners. me in the middle of 2009: I found myself crewing an old America’s Cup yacht in And, in a dynamic absolutely unique Narragansett Bay…we were in a two-boat to Redwoods, we benefited from our race and we were behind. Suddenly, the customers getting better as well. For ex- captain – a crusty old guy – tacked away ample, there were zero deaths by drowning from the planned route and changed in 2009 at any of the pools or waterfronts the terms of the engagement. We were managed by our insured organizations. all shocked, of course…he looked up That’s zero communities who had to grieve; and said, matter-of-factly, “Can’t win by zero customers facing damaged trust, followin’…” Clearly, we did not ”follow” diminished funds and a weakened ability in 2009. So to protect our root system, to deliver on their mission; zero impact on we had to turn our other sustainability our underwriting profit and the long term dials – most of which are enterprise assets sustainability of our business. unique to Redwoods. THE REDWOODS GROUP | 2009 COMPANY REPORT 7 Stopping drowning deaths is an amazing One more development accomplishment, but it’s not unusual for to report: 2009 saw us join us.