Shortly after FASI, I went to Las Vegas as an invited convention speaker to a manufacturing association. “A Profit Center Inspired by Warren Buffett” explored how to grow a balance sheet. You can download it after we get LinkedIn. The post-conference impact and activity was considerable. After the show, we modelled pricing for an insured monthly service contract to be offered to hundreds of Seven-Eleven stores throughout the mid-Atlantic. The company making the bid proposed covering all the stores in the region, from decades old to brand new. He sought to create or partner with a risk bearing entity to stabilize the pricing due to wide range of equipment and in varying states of conditions. A regional quick service restaurant franchisee with dozens of locations owned a subsidiary to service its units’ hvac, plumbing, electrical, gas systems and parking lots. We discussed a monthly flat-fee service contract to sell the service to hundreds of other within and outside of his franchise. He wanted this to be a profit-center solution inside an insurance wrapper. For a private-equity-owned national sign company we gathered proprietary information from them, their suppliers and independent installers, to price a 10-year warranty on the re-imaging of six thousand convenience stores. What attracted them was owning a novel way to build capital, favored by the tax structure which encourages accumulation of capital through insurance. Their proposed extended service contract would leverage benefits from tax deferral as part of their warranty extended service, giving them a credit facility that they controlled. It could be used to finance purchases, loan money to portfolio companies, be a source for new fees as AUM, or make distributions to shareholders.
Operations can use rigorous quantitative risk analysis to find new areas of growth. Polestar Insurance has proprietary tools to uncover pathways to greater profit.
