U.S.I. Says IPO Makes Acquisitions Easier

David L. Eslick, U.S.I.'s chairman, president and chief executive officer, was given the honor of officially opening the NASDAQ market for business this morning.

U.S.I. has made three acquisitions in 2003–Long Beach, Calif.-based BMI Insurance Services Inc.; Woburn, Mass.-based Hastings-Tapley Insurance Agency Inc.; and Jericho, N.Y.-based Guild Agency Inc.

"We concentrate on middle market clients and look to acquire smaller single-state or regional agencies with this type of business," Mr. Eslick noted. He added that sometimes the agencies that U.S.I. targets are not officially for sale and it takes some convincing to get the owners to agree to sell.

"We don't want to become involved in ?auctions' or agencies whose owners are looking to exit the business," he said. "We want to work with them to grow their accounts."

A growth method favored by U.S.I. is to "round out" accounts by going after employee benefits or financial services business of clients for which U.S.I. or an acquired agency now has only the property-casualty, and vice versa, Mr. Eslick indicated. "Acquired agencies must subscribe to our cross-sell culture."

U.S.I. maintains detailed spreadsheets showing types of coverages that clients have purchased, have declined or that have at least been discussed with them. Any white space on the spreadsheet signifies coverages for which clients have yet to be broached by U.S.I. producers or other staff. "We don't like white spaces," Mr. Eslick stressed. "If a coverage hasn't been discussed with a client, we want to know why."

He also stated that it is very important that the acquired agencies adopt the U.S.I. brand, which in turn gives them the market clout that they may not have previously enjoyed. The usual strategy is "fold-in" the acquired agency into a nearby U.S.I. branch, rather than to continue to have the agency act independently.

An example of the clout that U.S.I., the ninth-largest U.S. broker [according to a company overview provided at the meeting], brings to the table for these smaller agencies is its many insurer markets.

"Consider those agencies whose two main markets are Travelers and St. Paul," Mr. Eslick said, the implication being that they will soon have only one main market. "Also, the agencies that wrote a lot of business with PMA and other carriers now in financial difficulty have a similar problem with market contraction, he said.