Life Wholesale Broker Enters P-C Field With Sights On Top Spot

BISYS, admits Dennis Sheehan, the financial services firm's president and chief executive officer, is not a household name. And as far as BISYS is concerned, they would be very happy keeping it that way.

"We dont deal directly with the public; we work more behind the scenes," said Mr. Sheehan. "That is why we are not a household name."

He explained that BISYS provides business process outsourcing services to the financial industry. The firm, he said, is one of the largest providers of services to the mutual fund, hedge fund and private equity industries. It is the largest provider of record-keeping services to small and mid-size companies, he said, and does the 401(k) record keeping for 15,000 companies. It also provides data processing services to banks.

Where does insurance fit in?

On top of all the other services, according to Mr. Sheehan, BISYS is the largest wholesaler of life insurance and life related product to life agents.

"Our strategy is to add more and more products to our business to offer to the financial service industry," he said. "We got into the insurance industry in 1996. We have made 17 acquisitions in the life wholesale industry in that space of time. We are today the exclusive wholesale distributor to 100,000 life agents–and none are our employees."

That point is important, said Mr. Sheehan, because it goes to the core of BISYS philosophy of being an independent distributor of product where agents know they can find what they need and companies know theyll get their products distributed.

"We believe we are the largest distributor of life insurance in the United States," Mr. Sheehan remarked.

Entering on the p-c side seemed like the next step in the companys growth, he continued. And the plan, as on the life side, is to become the biggest independent distributor of p-c products in the country.

"We believe there is a need for someone like us to enter the property-casualty side because there is a need for a large independent wholesaler," said Mr. Sheehan, adding that there are few large independent wholesale brokers in the country that are not owned by large retail operations.

"We believe a large number of independent retailers want to not be affiliated with their competition and would rather do business with an independent wholesale broker," Mr. Sheehan said.

Remaining an independent wholesaler and finding a partner to grow with were elements Tri-City sought, said Mr. Hahn.

"We were looking for a larger owner-partner with access to capital that would help us accelerate the building of our business," Mr. Hahn said, noting that this is a major obstacle for any independent business. "The reasons we did it coincided with why BISYS was a great choice–because they are a builder of wholesale businesses with a great track record that really impressed us.

"When we spoke to them and learned they wanted to take the same path in the p-c world, we got very excited about that. With BISYS there is also no conflict with our customer or carrier channels."

Because of BISYS extensive technology programs, Tri-City saw this as an added benefit "to improve efficiency, which is great for both of us," said Mr. Hahn.

And there was one other point that made the acquisition of Tri-City by BISYS very appealing, said Mr. Hahn. "We both want to be number one."

"This is initially a small step, but we want to become the largest independent wholesaler of life and p-c in the country," added Mr. Sheehan.

When it came to making the decision, related Mr. Hahn, it came relatively quick, within less than two months after discussions began. He said the more Tri-City looked at BISYS, talked to its people, they could see a culture that would fit together.

"The name of the game for the wholesaler is speed and risk taking," said Mr. Hahn. "We saw right off the bat that there was an instantaneous connection. We fit well together. But like any deal the reality comes when the rubber meets the road," adding that Tri-City got exactly what it was looking for in its partner.

It also helped that Tri-City went through one acquisition by an insurance company back in 1999 that failed because the cultures did not fit. He did not want to name the company, but said that the merger did not work because there was a clash in the decision-making process.

"We knew plenty about what to ask because we knew what we did not want," Mr. Hahn pointed out.

Also of importance to Tri-City was being the "platform company" that will take the lead on the p-c side in building the business, noted Mr. Hahn.

The Tri-City platform is that of being a generalist with access to all lines and expertise in certain areas of the insurance business, pointed out Les Ross, executive vice president with the wholesaler. The firm breaks down into three commercial coverage areas: casualty, property and financial.

On the casualty side, Mr. Ross explained, its expertise is in construction/ contractors, habitational, hotel risk, difficult products liability and transportation risk. In property, lines he highlighted were difference-in-conditions coverage, earthquake, large quota share and layered programs. He said the financial lines include directors and officers liability, for both public and private companies, employment practices liability, professional liability, and medical malpractice.

The firm also has its Five Star Managers division, a very small part of the firm, with underwriting authority for a handful of classes such as errors and omissions, professional liability, and employment practices liability.

Both Mr. Sheehan and Mr. Hahn said, with the Tri-City base, next steps will be a combination of acquisition and growth through cross-selling to BISYS existing customers.

"The business dictates that in the future there will be more cross-selling by both p-c and life agents and we want to be the place for that crossover," said Mr. Sheehan. "This is the only place where independent retailers can come over for both."

Mr. Hahn added, "We thought there would be more power and strength in combining our knowledge, and it has already paid tremendous dividends."

Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.