Amid Lansing’s big manufacturing and government headliners, the capital region is quickly building a reputation as a center of banking and insurance. Hosting many national leaders of the financial sector, these companies are adding jobs, investing in expansions and spinning off related jobs across the region.
Take
Jackson National Life, for example. The Okemos-based company claimed $80 billion in assets last year, did $10 billion in retail sales and added more than 50 employees to its substantial payroll in a single year.
Or how about Lansing-based family bank
Capitol Bancorp Limited, which recently became the largest holder of individual bank charters in the U.S., with recent charters in Arizona and Texas bringing its total to 60 community banks in 17 states?
And who could forget the major announcement from
The Accident Fund, whose fast growth is putting a new face on one of Lansing’s downtown landmarks, with a $180 million renovation of the
Board of Water and Light’s old power station?
It’s enough a raise a few eyebrows, and inspire this quick tour of a region that’s clearly in the money when it comes to the new global economy.
Insurance insightsIn 2006, insurance companies headquartered in the Lansing area supported 6,400 jobs and paid more than $358 million in payroll, according to Lori Conarton, communications director for the
Insurance Institute of Michigan.
“The insurance industry is strong, it’s a growth industry in the state,” says Bob Pierce, with the
Michigan Association of Independent Agents (MAIA). “It’s creating jobs, and because it provides new jobs, it draws people to this area.” Pierce says insurance payroll in Michigan overall grew by 20 percent between 2000 and 2003. It’s estimated to grow by another 10 percent by 2014.
The area is full of examples. Lansing-based medical liability insurance company,
FinCor, reported third quarter earnings of $25.8 million, a 29.1 percent increase from last year’s third quarter earnings.
Jackson National Life plans on adding 50 to 70 jobs a year for the next several years. Says Andrew Hopping, JNL’s chief financial officer, "We've had success in our recruiting efforts because, in large part, the insurance industry is a relatively high paying industry, the cost of living across the Lansing area is relatively low and mid-Michigan offers an attractive quality of life."
The insurance sector creates jobs that are well above the average Lansing salary. According to Pierce, the median annual salary for an insurance employee is $40,000 to $60,000 a year – 40 percent above the median salary for other private sector jobs in the region.
Area insurance companies are growing so fast that many of them are literally bursting at the seams. The Accident Fund’s big downtown announcement was born out of a need to accommodate an additional 500 employees. Earlier this year,
Auto Owners Insurance announced a plan to build a $45 million data center in Lansing, and add 80 new jobs.
And
Delta Dental is planning an $85 million,
LEED-certified expansion in Okemos, with plans to add 150 new employees over the next several years.
Banking on East LansingEast Lansing is in the midst of a transformation from Midwestern college town to home of a major financial corridor, where at least five major financial institutions have a headquarters, and are supported by brokerage houses and insurance companies. And it started with a little company called the Michigan State University Credit Union.
Well, it’s little if you consider building a $22 million global headquarters chump change.
MSU Federal Credit Union was founded in the 1930s by several Michigan State University (MSU) employees who wanted a financial institution they could trust during the depression.
It’s now the largest university-based credit union in the world, with more than $1.4 billion in assets and more than 145,000 members. It was named by the
Society of Human Resources Management as a top-25, medium-sized company to work for in 2006 and 2007.
MSU Federal Credit Union’s headquarters is on the eastern side of East Lansing’s new “financial corridor,” really more of an uneven circle that encompasses
Summit Bank,
Independent Bank,
Mercantile Bank,
Citizens Bank and
Fifth Third Bank.
In 2004, Summit Bank opened its new headquarters on Abbot Road, anticipating a surge in its customer base and secure in its $68 million in assets. It’s since opened a branch in Okemos, added employees, and watched profits grow.
Summit Bank President and Chief Operating Officer John Abbott says the company originally opened in East Lansing because the majority of its shareholders were based in the East Lansing area.
However, a strong community, loyal customers and support from the
City of East Lansing prompted them to build their new headquarters in the area.
“It’s been everything we had hoped for,” Abbott says about the expansion. “The community has been very supportive of us. They’ve brought their business to us, and we feel very comfortable here.”
While East Lansing boasts a thick resume of expanding financial institutions, there’s more to come. City manager Ted Staton says brokerage house
Smith and Barney will expand its local office and move into East Lansing’s financial circle next year.
“If you were to think of the biggest brokerage houses in the nation and where their local offices are, you’ll find that they’re concentrated in
East Lansing,” Staton says.
Fringe BenefitsThe strong financial sector creates a wide variety of related jobs that appeal to people with different education levels, diversifying the economy with everything from clerical roles to highly skilled IT jobs.
It also means that thousands of employees working for area insurers, financial institutions and law firms also need places to eat and shop, which spawns entrepreneurial ventures in seemingly unrelated industries, says MAIA’s Pierce.
And the insurance industry alone will create hundreds of related opportunities in other banking, financial and legal services, according to Acting Commissioner of the
Michigan Office of Financial and Insurance Services, Ken Ross.
“That gives an opportunity not only to workers from other displaced industries, but it’s a great first-time opportunity for college students out of
Michigan State University and
Lansing Community College,” says Ross. “Those things tend to amplify the industry’s impact throughout the economy.”
Ivy Hughes is the Development and Innovations News Editor for Capital Gains.
Dave Trumpie is the managing photographer for Capital Gains. He is a freelance photographer and owner of Trumpie Photography.
Photos:
Andrew Hopping, JNL’s chief financial officer
Bob Pierce, with the Michigan Association of Independent Agents
Auto Owners Insurance
MSU Federal Credit Union
Acting Commissioner of the Michigan Office of Financial and Insurance Services, Ken Ross
All Photographs © Dave Trumpie