The rewards of risk.

• Author: Scheer, Lisa
• Position: Integon Corp. - Includes related article - Profile - Company Profile

Integon gets great mileage out of insuring drivers others won't touch. But rivals want to run it off the road.

Jim Lambie looks out the window of a modestly furnished 18th-floor conference room at Integon Corp. headquarters in Winston-Salem. The company's president is disappointed with the view. Clouds, he points out, obscure the horizon.

Integon could be heading into some rough weather of its own. A maturing market in its main business -- covering drivers other companies shun -- is squeezing the unusually rich margins of the $640 million (assets) specialty insurer just when a larger and wealthier rival is invading its home state. Investors have turned jittery about Integon's prospects, pushing its stock price down 32% over the past year.

But in 51-year-old Jim Lambie, Integon has a survivor who's shown during 21 years with the company that he can thrive amid turmoil. He's seen Integon taken public three times and sold twice to absentee corporate owners from vastly different industries, then once more to some big-bucks, big-city investors. And he's still managed to move ahead.

"Jim is relatively low-keyed, and he doesn't get frustrated about things not going his way," says John McKinnon, dean of Wake Forest University's Babcock Graduate School of Management and an Integon director. "He doesn't lose his cool."

For most of its long history, Integon was a much calmer place. Founded as a life insurer in Greensboro in 1920, it soon moved to Winston-Salem. For the next half-century, the company sold home-protection insurance through S&Ls, moving into other life-insurance products and some property and casualty lines, as well as a little noninsurance business such as computer services and real-estate development. Its board once included such North Carolina notables as retail czar John Belk and former Duke Power CEO Carl Horn.

Lambie joined Integon as a staff attorney in 1972, just as the company was going public the first time. It was the start of a round of buying and selling that persisted for two decades. Kentucky-based Ashland Oil bought Integon in 1980, then sold it to Texas-based Southmark Corp. five years later. By 1989, Southmark's real-estate business had gone bust, and Integon was sold again in 1990 in a $236 million leveraged buyout led by New York's Head Investors, a merchant bank with interests in five other insurers, and Chicago's Jupiter Industries, a privately held ($1 billion revenues) conglomerate with a mixed bag of businesses ranging from construction to real estate. "The financial owners at Southmark were manipulating things up above this insurance company that was doing its job," McKinnon says. "But once Integon had gotten out from under Southmark, the Head group recognized that this was a good operating company that could make some money."

So in early 1992, the specialty auto-insurance division headed by Lambie was spun off as a free-standing company called Integon Corp., with 46% of the shares sold to the public. Part of the $101.8 million raised in the offering was used to pay down debt and beef up the business. The rest of the old company, Integon Life Insurance Corp., with $1.7 billion in assets, remains privately owned by Head and Jupiter.

John Head III, 45...