John Butler
President: Cottingham & Butler

Additional conversation with John Butler

TH: This is the 40th anniversary of your becoming president of the company. Your promotion was due to tragic circumstances -your father passed away.
JB: Yes. I was a relatively young person at that point. Actually, my younger brother Peter and I operated the business for some years together after that. When I joined the business, there were just three of us - my father and his secretary and me. Now we have pretty close to 300 people; most of that growth has occurred since the late 1970s.

TH: What was your first duty in this very small insurance office?
JB: With a fancy education and three years of Navy experience, the duties were rather basic at that point. Homeowner's package policies were just coming on the scene and that was a new, very good idea. I recall converting a lot of clients who had so much insurance on their house and so much on their contents and separate policies and separate liability policies, converting them to homeowner's package policies. That was an opportunity for a young person to start to create some action.

TH: Before that, how did it happen that you entered the Navy?
JB: In those days, everybody went into the service. There wasn't a fellow in Dubuque 18 or 19 who didn't have to go into the service. I was fortunate in going to Navy Officer Candidates School in Newport, R.I. I didn't want to go into the service. I had just been married a year. I couldn't wait to get out - and I wouldn't trade the experience for anything. But I had to be pushed to do it. My wife, Alice, and I moved 13 times in those three years. But, of course, we had no children, and actually it was pretty good fun. I was a supply and disbursing officer on the ship. I think I had 140 men in my department. I remember my father couldn't get over the fact - how could the Navy put someone of my tenure and lack of experience in charge of 140 people? What did I know about that anyway? It was a good experience. It was a maturing, adventurous time of life.

TH: I see a photo of a ship on your wall.
JB: That's the USS Tolovana. It was in the Pacific and it was a fleet oiler. It was quite a large ship. Our mission at the time was primarily to fuel the Seventh Fleet, which in Eisenhower's days was steaming up and down between Formosa and the coast of China. They did this for seven years, I think. Of course, they needed to be fueled at sea. They were armed with atom bombs and they were going to keep China in tow.

TH: You were married at the time?
JB: Yes. Alice and I were married. We were each 21, which probably by today's standards seems extraordinary. We were married in college before I finished graduate school and before she graduated from college.

TH: And you met in college?
JB: Yes. I went to Babson College, and Alice was a chemistry major from Wellesley College, both of which are in Wellesley, Mass.

TH: How did you meet?
JB: We had two friends who introduced us. One of Alice's girlfriends and one of my good friends. It was almost my downfall, Brian, because I was spending too much time at Wellesley College. My father explained to me after my grades arrived. At one point, he said, "You know, it's really nice that you have a good friend, but," he said, "this costs a lot of money and unless you do really well, I have no interest in paying for it." And that was a big jolt to me because it was obvious I was going to end up back in Dubuque if I didn't shape up. So I fixed that problem.

TH: What was your father like as a boss? I'm always interested in talking with people in family businesses.
JB: Yeah, family businesses are terribly interesting. There's an extra layer of complication there besides just having a boss and then if the boss is your father, that adds considerably to the complications of a relationship. My father was very impatient, as I recall. I enjoyed being in business with him for the relatively few years that we were in business. It was not easy. I probably have fulfilled my father's dreams.

TH: What are Cottingham & Butler's various businesses or divisions?
JB: Our main business is to be insurance brokers and counselors. That would be directed toward larger businesses or institutions. In 1980, we started a self-insured services company, SISCO. SISCO's business is to administer health insurance plans, self-insured health plans for employers. That's been a very good business over the years. We have quite a geographical dispersion of our clients. We have many wonderful and loyal, long-standing client relationships in Dubuque, but interestingly, we probably do about 95 percent of our business with accounts where the decision-maker would be outside of the Dubuque area. The health administration business, SISCO, was expanded a few years later, maybe in '83 or '84. It was expanded to include self-insurance administration of casualty lines, such as worker's compensation or such as liability insurance for a large fleet of trucks. Self-insurance is a very good idea. This would be part of what we would call the alternative market, alternative to regular commercial insurance companies. That happens to be a very good idea. We didn't invent it, but we certainly were pretty early on in recognizing that and organizing ourselves to provide those services. We expanded that further in the early '90s when we started a firm that we call Healthcorp. We have a medical director and about 16 nurses. Healthcorp would help the employer and his employees be intelligent consumers of health care. We do not practice medicine, but we would do utilization review, case management of complicated cases. This is very useful not only for health insurance, but also for worker's compensation. Large self-insured worker's compensation clients.

TH: This is for pre-approval or second opinion?
JB: Yes. And more than that, in real serious cases that are more ongoing, our nurses and our doctor would work closely with your doctor and your hospital. That has been a very good idea. It's been a very successful thing. We've done some other very interesting things in the alternative marketplace. In the early '90s, we formed our first captive insurance company. We now have three captive insurance companies.

TH: Could you explain what the captive is?
JB: A captive, as I'm using the term, is an insurance company. It can either be organized in a few states in the United States which permit captives or it could be offshore. Typically Bermuda and the Cayman Islands are captive sources, home bases for captive insurance companies. In fact, it's a really big business and a very legitimate business. You can do it onshore or offshore. There are a couple of small advantages to doing it offshore. But the captive insurance company is owned by the policyholders. So we organize the captive. We go out and help large companies analyze this and evaluate it and if they choose to avail themselves of it, then they buy a share in the captive and they become an insured by the captive. We have about 100 or so rather large companies now who are member policyholder owner; I should say owners and policyholders of the insurance company. That has been a really very successful business. Again, we did not invent the idea, but we discovered it pretty early on. It really is quite a big thing in the insurance industry among larger companies. It gives them the benefit pretty much of self-insurance and yet there is some pooling effect and a captive is always fronted by a major insurance company. So you might get, if your captive uses The Hartford, which is one of the companies we use, then you'll get a Hartford policy, but actually, your captive will reinsure The Hartford very significantly.

TH: And the purpose for taking this out for is for tax purposes?
JB: Yes. Ultimately, you pay your taxes, but you are able to defer your taxes to some extent and that the buildup of capital through increases of reserves and so on offshore is not taxable until you take the money home. But in the meantime, it would be like your IRA. It would grow without having a slice taken off for taxes along the way.

TH: So, those would be the main divisions of your business?
JB: Well, there would be a great deal of regular commercial insurance along with those things. But being able to offer the menu of services and different ways of managing risk to clients makes us attractive in the marketplace. It's very unusual for a firm in our industry to be able to offer all of those things.

TH: What's ahead? What goals are still out there for the company?
JB: Well, I see my role, Brian, really as a coach at this point, and a developer of a great team of leaders. I'm very pleased with the progress that we're making there. We have some outstanding leaders coming along in our business. We have some very ambitious goals for the next five to 10 years. I'm not going anywhere, but I really expect other people to be assuming greater responsibility as we go along. And that is happening. We would think that it would just be a lot of fun if we could multiply this business by three or four times in the next five to 10 years. I think we have a good shot at it, and I think that would be really exciting and good fun. It's a people and relationship business so all you need to do is keep getting better people, great people, to join your team. I've tried to surround myself with good people from the very beginning. We have more than our share, and that's the way we want it. It's a huge industry. It's like being part of an ocean, rather than a little pond. We think there's a great deal of potential there.

TH: Your reference to water reminds me of what I saw on the home page of your Web site. The scroll says, "We can't control the wind, but we can set the sails." Are you responsible for putting that on there?
JB: I think so, yes.

TH: How that is conveyed and communicated in your operation?
JB: Well, of course, you can't control the hand that you are dealt. I mean, you get what you get. But as you look around, what people do with their hand, there's an extraordinary contrast. Some people whom I've observed carefully, you can drop in almost anywhere and they would start to swim beautifully. It doesn't matter where you drop them in. We like the theme that really, you are the master of your own destiny. This company is the master of its own destiny.

TH: As a major employer in town, it's important for you to be able to attract young people and keep young people. How tough a sell is Dubuque if you have younger people outside the community looking at your business and looking at Dubuque?
JB: Some days that seems like a big problem. So as a result, we've recruited very heavily from Dubuquers or people who were raised in a similar-sized community. Some of our senior executives were complaining about this last fall to our board. And one of our board members, who happens to be a former president of The Hartford Insurance Co. said to us, "Look," he said, "Have you guys ever heard of Bentonville, Ark.?" Yes. "Well," he said, "if you build it, they will come." I'm sure he's absolutely right. It would be important that this be a community that would a pleasing place to live for very talented people who could do very well anywhere, because otherwise, they won't come here. So we really do need to pay a lot of attention to how the place looks. I think most people would say our education system seems to get good grades from most people. The leisure and recreation, the arts, I think a lot of people think that that adds a great deal to life in a community and that they should be emphasized. We have tried to emphasize that. We try to get support.

TH: In reading our article about you from 1987, Walter Peterson mentioned how you're probably the best-dressed gentleman in Dubuque. I think he said "ramrod straight."
JB: I had forgotten that.

TH: I was curious about your reaction was to that. Is that what you see when you look in the mirror?
JB: Oh, no, not at all. At this point in life, when you look in the mirror ... oh, it's really been a long and interesting odyssey. Through the years, Alice has been an excellent partner. We are terribly proud of our children. Susan is very active in non-profit organizations here and I think makes a very fine contribution to their success. And Andy operates a business similar to ours down in Davenport and he's doing a good job. We're very proud of Susan and Andy, and Andy's family. They're doing things just right. So when you look in the mirror, you think about those things.

TH: We're sitting here in this historic Dubuque landmark, the former Stampfer Building. You, of course, have expanded in this building and you have also expanded and remodeled across Main Street ...
JB: The Town Clock Building.

TH: I'm interested in your view on downtown Dubuque, the downtown business culture. You could have set up shop any place. Why are you here at Eighth and Main?
JB: Well, first of all, as we were expanding our business, it was great to be in the empty old Stampfer Building because every time we needed more space, we'd just knock a wall down and move down, take some more space. I didn't realize how convenient that was. But that worked out very well for us. We still think that this is a good location for us because it's so accessible. We have a lot of employees from west of Dubuque and Wisconsin and Illinois and this really is very convenient. This is probably the most convenient place in Dubuque to get to from all of those places, so we like that quite a bit. There have been enormous changes in downtown. The mall, which of course everybody thought was the great savior for the downtown, turned out to be a very unfortunate move.

TH: The pedestrian mall.
JB: Yep. So many buildings were torn down. I think there were 50 businesses that went out of business and so on. We loved to see the downtown come back. There are some distinct anchors in downtown, which your company would be one and American Trust and another. You look around and there would be some that are very significant. We would like to hope that the downtown will recover but in a different form than it was. We think it makes a fairly good office area. We like to see the art museum and the arts in general - the Grand Opera House, they've done a fair amount of work on the Grand. That's still a work in process. But I think the art institutions, the theater and so on, are likely to lead, if we're going to come back, it's likely to lead that because it will get people here. So we think that's quite important to go do that. We're grateful that we've been among people who have supported that effort with the Grand and also with the art museum.

TH: There was a period of time when you were on the record of keeping the pedestrian mall as an office park.
JB: Gee, I thought you would have forgotten that, Brian.

TH: Oh, no. I was interested in what caused you to take a different look at that. And what is your impression and reaction to Main Street now that it is open again?
JB: Well, I think it's really very nice. And most people, I think, are quite enthused about it. I think it was a profound improvement. Originally, we thought the pedestrian mall was OK, but from the time that I said that over the next couple of years, I watched the downtown continue to deteriorate and it really was an impossible place for retailers or restaurants. People couldn't get to their restaurants. One of our principles, Brian, is if you think you're wrong, you'd better change your mind and stand up and do something about it. We decided that that wasn't the way to go.

TH: Your reaction is that...
JB: It's helped.

TH: Now, you own the building on the corner, too. The former restaurant.
JB: Yes.

TH: Any plans for that at this point?
JB: We do not at this point. We bought that as a reserve for another expansion stage. It's available to go do that.

TH: You remodeled the former O'Neill Building, and it looks fantastic. What were some of the challenges in the particular project? From a construction, remodeling standpoint - but now you've got employees in a totally different structure.
JB: Well, actually, it was fun to do the building. We had an excellent construction manager, John Gronen, who is really into historical renovation with great enthusiasm. We had a fine architect. The building took a lot longer than we thought it would and it cost a great deal more even than what we thought it would. But we're quite pleased with the result. People enjoy working there. Bottom line, it was a good move for us. So we're happy with it. Of course, we took advantage of the street being torn up to building a passageway connecting the two buildings, a nice big open area passage way.

TH: And that was about a $2 million renovation?
JB: Actually, it ran quite a bit more than that.

TH: You don't want to say how much?
JB: I'd rather not, except that DB&T, I think, is experiencing the same thing with their building - which, by the way, I think is going to be just a splendid feature in downtown.

TH: Now, you're still on the board of trustees at the University of Dubuque?
JB: I am.

TH: What the heck is going on over there? All these big donations? And enrollment is up?
JB: Well, first of all, I'd like to tip my hat at all three of the colleges. We think that they make a great contribution to our city, both economically as well as bringing in really interesting citizens. I think that that is part of the uniqueness of Dubuque, is to have a town of this size with three fine schools. We focus on the University because I'm on the board there and I'm not on the board of the other two schools. But we care deeply about the other two schools and supporting them. The university is going through a metamorphous. And that's very pleasing. It's a fine old institution with many glorious chapters of history. It's distinctly picking up and we'd love to see that continue.

TH: From where I'm sitting, the number and the frequency of these large donations is remarkable. What are the donors seeing at the University of Dubuque that's causing them to make that major commitment?
JB: I've been on the board at the university for many, many years. I once commented to Walter Peterson, when he was president of the university, I said, "You know, this whole field of higher education is run in such an awkward manner compared with the way you'd run a business, I don't know what makes it work some days." He said, "Well, actually, John, it works very well - when there's enough money." And I've often thought of that. He's absolutely right, of course. But I think a number of the donors, many of whom would be friends and acquaintances of mine, feel that the university makes a significant contribution to society and some of us are also incented because we think it makes a good contribution to the city. You find money follows interest.

TH: What do you do for fun?
JB: I have a lot of fun. I do. Alice and I very much enjoy traveling. We travel a lot, both on business and on pleasure. We enjoy snow skiing a great deal. We're both skiing better than we've ever skied in our lives, which we think is just pretty neat at age 72. We enjoy biking. I bike around here on a Sunday morning sometimes. Mountain bike in Colorado. We've taken some very interesting biking tours abroad. The latest one was Vietnam a year ago. Gorgeous place. Terribly interesting place to go. Seeing it by bicycle. That's the way you really see a country. I very much enjoy working. So I might be gone three or four days and then I'll come home and happily work all weekend. I work pretty good lengthy days when I am here. But I enjoy it. I'm a volunteer, Brian; otherwise, I wouldn't do it. TH: That leads in to this question: Do you just plan to keep this up ...
JB: Forever. In case I live forever. TH: You're at an age when a lot of people either are retired or quickly heading toward that.
JB: Well, I find my life to be very interesting, so I'm not eager to change it. I clearly recognize that of necessity I am becoming much less of a hands-on leader and much more of a coach. And I am very eager for the leaders of our company to come forth and assume more and more and more responsibility. You know, people like me never really want to state when they're going to retire for fear somebody will give them a push earlier.

TH: Say, 20 years from now, when the leaders of Cottingham & Butler are talking about the previous leadership, what would you like them to remember about John Butler? JB: Well, there are very significant years that I was involved in the business. Deeply involved. To go from three people to 300, then if we can go to 900 or 1,200 in the next five or 10 years, I would think that would be considered a good day's work.