Interview With Bagley Risk Management

Transcript

This is Stephanie Malench and I am here with Andrew Bagley of Bagley Risk Management Services.

“Thank you Steph. My name is Andrew Bagley and I started Bagley Risk Management in 2012 as a Crop Insurance Business. I started as an agent in 2007, then went to another company for 4 or 5 years and then started my own independent agency. A couple years later, we expanded into Livestock Risk Protection (LRP) and two years ago I sold the crop insurance portion because I wanted to spend more time and focus more on livestock risk protection. I have a very, very large interest in livestock production. I grew up on a farm in southwestern Illinois raising Angus cattle, backgrounding feedlot cattle, and finishing feedlot cattle. I also take a particular interest in the financial and marketing side of feeding cattle as well. In 2010 – 2011, I passed my Series 3 brokerage exam to become a commodities broker. I never did follow that any further or work for a brokerage firm. I also have a great interest in futures and commodity markets so at Bagley Risk Management we try to combine those two programs with the LRP and use options and futures to set floors and guarantee or maximize profits or minimize losses in livestock, particularly with cattle production.”

Where are you licensed and what made you choose the areas you serve?

“I’m in southwest Illinois as well as Missouri. I don’t generally apply for a license in a state until I know I am going to write a policy there. I can apply one day and be licensed the next. I can get licensed as fast as it takes to get an application put through with the underwriting insurance company as well. The majority of my business is in Illinois, but I hope to expand beyond that.”

What sets your company apart from other companies that sell Livestock Risk Protection?

“The biggest thing is my experience with futures and options. There are a lot of insurance companies that will sell an LRP and that is fine but with the volatility in today’s market where they are rallying very fast and selling off fast, you have the ability to lock in additional profits no matter which way the market goes by using different types of programs through options and futures. I do not talk about my trading strategies because I have developed those myself and try to keep those confidential. There are certainly ways most insurance companies aren’t aware of how to do that. I work with Captive Futures in Chicago, and I manage their LRP business. I have been hedging their cattle and crops with Kapco and owner Jeff Kaprelian, and I have gotten to be really good friends. I help them out, they help me out, and we utilize their strategies. They have more time to sit down and analyze markets from a fundamental and technical standpoint than I do so we work together on things. That is what sets me apart.”

What type of cattleman needs Livestock Risk Protection Insurance?

“LRP is a great product for anyone who is raising cattle for meat consumption. Even in the dairy industry, there are policies for Holstein steers. Some finish out their dairy steer as well. You can take a policy out for dairy or beef cattle. There are three segments of the industry it helps with. First is cow/calf producers calving March 1 for cattle before they are born up to 8-9 months out, can lock prices in for the fall after we’ve seen a significant rally in the markets. The second is the backgrounding meat producers where the cattle end up after they leave the calf producers and go out on wheat fields or out west on grass and weigh in the 500–850-pound range. The third segment is the finishing side of things, or the fed cattle industry, the feed lots out west predominantly, that take them from yearling up to finishing 1400–1500-pound steers. So, there are four segments that can all benefit from LRP insurance- dairy cattle, cow/calf, feed cattle, and fed cattle.”

What is the most popular insurance you sell?

The LRP for backgrounding cattle. Most of those cattlemen have a few hundred head at a time, the fed cattle is ok and although premiums can still get a little high, they are still significantly cheaper than options on the board of trade, but most of those guys self-insure. The cow-calf industry is also big.“

Finishing thoughts and how do people get a hold of you if someone wants a policy?

“Anyone who wants to see what LRP entails can fill out an application or have a phone call to see if this is a good option and talk about your operation, so we can see if this will really work or not. There are a few instances where there are better alternatives, but in more instances than not, an LRP works great. If you’d like to talk, you can call me at (618)660-4410 or you can find me online at bagleyriskmanagement.com.”