Headquarters: Owatonna
Revenues (FY 2005): $1.5 billion
Founded: 1904
Employees: 2,600
Ticker: Private
Web Site: www.federatedinsurance.com
What It Does: Casualty and property insurance and risk management for businesses throughout the U.S.


As a college student at Mankato State University, Al Annexstad sold furniture while studying to be a teacher. Then a sales manager from Federated Insurance, who’d heard of his sales skills, approached Annexstad about working for him.

Forty years later, Annexstad is chairman, president, and CEO of Owatonna-based Federated Insurance Companies, which he has positioned as a leader in the commercial-insurance industry. Insurance rating agency A. M. Best ranks Federated in the top echelon of property and casualty insurers in the United States in terms of financial strength and operating performance. Federated currently has $4.5 billion in assets, a surplus nearing $1.5 billion, and annual premiums at almost $1.4 billion.

Annexstad contributed to Federated’s growth early on. After three years working as a marketing representative, he was promoted to district marketing manager and transferred to Indiana. In the next 10 years, he opened Federated offices in Ohio, Michigan, Illinois, Wisconsin, and Kentucky. In 1982, he became the director of field operations and moved to Atlanta; in four years there, he doubled the number of Federated clients in southern states.

More accomplishments were to come. In the 1980s, Annexstad created Federated’s first workable business plan, which established activity and growth expectations, proposed measurements to track results, and put in place standards for customer service. Under his direction, Federated also built a national system of marketing representatives, which helped bring consistency and discipline to its business development and client service.

In addition, Annexstad oversaw the development of marketing partnerships with affinity groups and trade associations; more than 400 state, regional, and national groups that serve Federated’s industries exclusively recommend Federated to their members. What’s more, he devised a strategy to establish a national network of attorneys to assist Federated clients with business-succession and estate planning.

The insurance industry has traditionally operated with significant underwriting losses, relying upon investment income to overcome these losses and provide profits. Annexstad doesn’t approve. “There are many temptations in this business to do things in the short term that may prove harmful over the long term,” he says. “We pride ourselves in our financial discipline. This means that we must be very good underwriters first, and then sound investors of our policyholders’ money.”

Annexstad also has driven Federated’s community involvement, including a charitable golf tournament this year that generated more than $1.2 million for youth mentoring. “If we are doing our jobs well, we will secure the financial strength of our company and thereby take care of our clients and employees,” Annexstad says. “From there, we can be positioned to reach out to our community.”