Las Vegas' oldest agency grows with the city

By Dennis H. Pillsbury

Looking down the Vegas Strip are Cragin & Pike's principals (from left): Thomas J. Burns, Thomas F. Kerestesi, Mark McKinley and Greg McKinley.

When Peter Buol established his agency in 1909, only four years after the tiny desert community where he started his business was given the name Las Vegas, he could hardly have envisioned the enormous growth that would follow. Operating out of a storefront offering Real Estate and Insurance, Buol also served as the city's first mayor. To be certain, he had confidence that the small community would grow, since it was a watering stop for the San Pedro, Los Angeles and Salt Lake Railway Co., which said it intended to build large machine shops in the area.

Like his successors at the agency that would become Cragin & Pike Insurance, Peter Buol recognized the potential that was represented by this town of some 900 people, many of whom were not permanent residents. Whatever it was that inspired Buol also convinced others that insurance might become a lucrative field as two more insurance men, M.M. Riley and Henry Lillis, opened offices only a few weeks later.

Buol soon was joined by William Pike, who jumped at the chance to move to a drier climate than his native Ohio, where his health was poor. He was given that chance when a British company hired Pike, who was a Cornell University graduate, to develop the Winterwood Ranch a few miles from Las Vegas. His health improved with the dry air and he decided to stay. He began an insurance career as Buol's assistant and eventually became an owner of the business.

Five years later, in 1914, Ernest Cragin moved to Vegas, working as a stenographer for Union Pacific until he took over the insurance business of Henry Lillis. He and Pike hit it off and formed a partnership with their first joint venture being the development of the Airdrome Theatre. Soon after that, they took over M.M. Riley's insurance accounts were merged and Cragin & Pike Insurance was born.

Interestingly, Ernie Cragin also recognized the importance of community involvement and, like Peter Buol, was elected mayor of Las Vegas in 1943 and served in that capacity for eight years. He was known as an active mayor and was well liked by the townspeople he served. In an editorial following his death, the Las Vegas Review Journal wrote: "During the regime of Mayor Cragin the city began its expansion and it was during his tenure that a majority of the streets in the community were paved. He also was responsible for the formation of a real police department in the city and saw the fire department change over from a volunteer group to the paid firemen."

Community involvement

Today, Cragin & Pike is the leading independent agency in Las Vegas with 44 employees and gross written premiums "of over $50 million," according to Thomas F. Kerestesi, CPCU, president. The agency has reached that level by remaining true to its roots. It continues to be an integral part of the community and has grown and changed as Las Vegas has grown and changed. "We are very involved in the community," notes Greg McKinley, vice president. "Everyone at the agency is involved with different charities."

Tom adds that "Greg is the founding chairman of the board of Boys/Girls Hope of Nevada, a charity that takes kids who, through no fault of their own, have little or no chance of success due to abuse or neglect. Boys/Girls Hope provides them with a safe home to live in, with caring house parents, and also provides them with a private school education through high school and then assists the kids through college. To date, 100% of the kids in the program who graduate from high school go on to college." Tom Burns, another agency partner, works with Child Haven, a shelter for abused children.

Tom continues, "Our involvement in the community and the fact that we don't compromise on integrity have been key ingredients in making us the leading agency in town. You have to remember that, in many ways, Las Vegas still is a pretty small community. We have selected our niches carefully and have always been extremely ethical in our dealings with customers. That has led to our success and to a quote-to-write ratio of 86% last year."

Outside of the Golden Nugget, Cragin & Pike producers surround the casino's Director of Risk Management Richard Fedkiw, ARM (center). The producers (from left) are: Susan Klassen, CPCU, ALCM; John Myers; David C. Heckethorn, CPCU and Todd R. Morse. Interestingly, the Golden Nugget is scheduled to be the subject of a Fox network TV series this summer called "Casino." Another client, the Green Valley Ranch, is scheduled to be featured on the TV series, "American Casino," on the Discovery Channel.

Tom followed his dad, Frank C. Kerestesi, into the agency. Frank had been a special agent with Great American in Los Angeles and met Ernie Cragin. He joined the agency in 1956 "when I was six," Tom notes. Tom went to the University of Nevada in Reno and then worked for Fireman's Fund and Royal in Los Angeles. He then joined Cragin & Pike in 1974. At that time, "the agency had premiums of less than $5 million," Tom says.

Industry involvement

Another key ingredient in the success of Cragin & Pike is its involvement in the industry. "We have a sense of pride in participating in our industry," Tom points out. "We are the only Assurex Partner in Nevada and that has provided us with a competitive advantage and an excellent network of successful agencies with which we can share information and ideas. Mark McKinley, CPCU, another agency partner, represented the agency at Assurex's 50th anniversary celebration in London," Tom adds. "We're also involved with a number of insurance trade associations."

Tom Burns, CPA, will be installed as president of the Nevada Independent Insurance Agents (NIIA) later this year. He is the sixth person from the agency to serve in that position. He was also recently appointed by the Nevada insurance commissioner to the board of directors of the Nevada Captive Insurance Association.

Tom Kerestesi is a past president of the NIIA and a past State National Director to the Independent Insurance Agents & Brokers of America (IIABA). He is a member of the board of the Nevada Surplus Lines Association.

Mark McKinley is a past president of NIIA and currently serves as a board member of the Nevada Insurance Guaranty Association. Greg McKinley is past president of the Southern Nevada Association of Insurance Agents.

"Involvement allows us to give back to the industry," Tom Kerestesi says, "and it also is good for the office and good for business. It allows us to keep our ear to the ground, so we can be proactive with our clients when changes are coming."

He continues, "We've also been involved politically. Tom (Burns) just finished his term as legislative chairman for the NIIA. We're fortunate because we personally know most of our elected officials on both a state and national level."

Growing with the community

"We're fortunate to be in a dynamic, growing community," Greg points out. "We've grown and changed as Las Vegas has grown and changed. Today, our niche markets are gaming and construction--the two largest industries in town."

It's hard to imagine Las Vegas without gaming. But, as noted above, the town got its start as a water stop for the railroad. Gambling was not legalized until 1931, the same year the Hoover Dam project was started. Both events had a profound impact on the community. And Cragin & Pike was there with the necessary insurance coverage and expertise. When the Flamingo Hotel & Casino, the first large-scale casino, opened its doors on the now-famous Strip, Cragin & Pike provided the insurance coverage.

"We had to figure out how to deal with the exposures," Tom says. "We worked with the casinos and developed an expertise in gaming that continues to this day. We continue to insure the vast majority of the local casinos, including two of the largest."

Cragin & Pike's Loss Control Manager George J. Robben (left) and Loss Control Specialist Rick Barrera (far right) speak with Dara Lesmeister, the Site Safety Coordinator for Marnell Corrao Associates.

Greg points out that the agency has chosen to "stay away from the nationals. Competition is too fierce. It's not that we can't compete. It's that our emphasis is on value-added service and we aren't looking to compete on price. We normally bow out of a bidding situation. We try to convince our clients and potential clients that the relationship is important. We are a trusted advisor to our clients, providing much more than just insurance. We have loss control specialists on staff in gaming and construction who act as advocates for our clients. Our message has been very well received and has resulted in an extremely high retention level in areas that are quite competitive."

Tom adds, "Many of our customers have been with us for decades. One large construction company has been with us 54 years. That's three generations that have continued their relationship with Cragin & Pike."

People make the difference

"The real secret to our success is our people and Las Vegas has been really key in helping us attract some fantastic people, a large number of whom have come from out of town," Tom says. "We've picked up people from Seattle, Anchorage, South Dakota and Southern California. And once they get here, they seem to like it. We do not have much turnover, especially in positions of responsibility. Our four partners have been with us a total of nearly 90 years--I've been here for 30; Mark for 25; Greg for 20; and Tom (Burns) for 12."

Las Vegas has been the key to the agency's ability to attract some fantastic people.

Greg continues, "It helps that we have one of the best benefit packages around. Until recently, we had both a defined contribution pension plan and a profit-sharing plan. We always made a contribution to the profit sharing plan. We recently collapsed the pension plan into the profit sharing and have continued to contribute 15% of each employee's salary to the plan. That's pretty nifty for a small insurance agency."

No agency is an island

"Our goal is for continuous improvement," Greg explains. "Assurex certainly gives us many excellent ideas, but we also recognize the need for additional input. We belong to Sitkins 100 and that has helped us redefine our focus. We work on a referral basis and have developed a philosophy that 'our current customer is more important than a future customer.' That really has helped us pick up a number of accounts from agencies and brokers that have not paid attention to their customer base. We also use Reagan Consulting for strategic planning.

"We don't want to be the biggest agency in the world, just one of the best," Greg concludes. "We focus on high quality and are convinced growth will come with it. We're in the top 2% in productivity and profitability, revenue per producer and revenue per employee."

Cragin & Pike exemplifies the type of agency that deserves recognition as our Marketing Agency of the Month. It focuses on serving its customers, its community, its employees and the industry. *