Crump Wholesale Brokerage Jumps To Number One

The acquisition of BISYS wholesale units by Crump will mean the Dallas-based wholesale broker will become the number one U.S. wholesale brokerage much quicker than it expected, the firm's chief executive said.

Yesterday, Citi and BISYS announced that Citi financial services was acquiring New York-based BISYS services and J.C. Flowers, the private equity firm that owns Crump, would purchase BISYS wholesale units and its retirement business from Citi.

The BISYS deal is worth $1.47 billion and Flowers' end of the deal will be approximately $800 million. The acquisition of the BISYS units by Crump will occur at the same time the Citi transaction is completed.

“This is a huge deal for us,” said Glenn Hargrove, chief executive officer and president of Crump. “It's a fabulous mix. There is little overlap and complements what we already do. This allows us all kinds of opportunity in the future.”

The purchase will double the size of Crump on the property-casualty side of the business to about 1,000 employees. As a whole, the ranks of Crump will swell from 460 employees to 2,700 after the deal is complete.

Besides the p-c business, BISYS-Tri-City also has a sizeable life wholesale and retirement services business, neither of which Crump has any experience in. The life business will account for 1,200 employees and the retirement business 700 employees, Mr. Hargrove said.

In terms of dollars, while he did not have retirement business numbers, he said the combined p-c and life wholesale businesses would amount to around $4 billion in premium.

Once the deal is complete, the headquarter operations will remain in Dallas, but the three entities–p-c, life and retirement–will operate as independent units, he said.

Both life wholesale and retirement business will remain housed in New York, while integration takes place on the p-c side.

Mr. Hargrove anticipates the two entities should integrate well. Crump is well established in Texas and the Southeast, while BISYS-Tri-City is well established with offices in New York, Chicago and San Francisco, but not the South. Crump is not well established in New York or Chicago and should be able to mix operations easily, he said.

“There is a lot of work to do, but I think it is going to go together really, really well,” Mr. Hargrove said, adding that the more they get to know one another, the more they are finding similarities instead of differences.

There will be no pressure to imprint a Crump stamp on the BISYS units, and he said it will be up to management to determine what marketing value the Crump name will have–but that is an issue for later.

“We are anxious for them to keep their identity and build on it,” he commented.

He said there is no interest to “carve out” BISYS business for Crump, and that any overlap issues are minor. He added Crump will be happy to have all of BISYS' broker and production people find a home within Crump.

As for cross selling, Mr. Hargrove said it would not be a key objective and understanding the possible synergies would be discussed later.

He noted that Crump's move continues a trend of consolidation in the industry, adding that the involvement of private equity money will help fuel that growth. He added that if Crump remained with Marsh it probably would never have this opportunity. Flowers, a private equity firm, purchased Crump from Marsh in 2005.

Crump intends to grow and continues to look at some small deals, but Mr. Hargrove confessed he never envisioned the company would have an opportunity to see such growth in one shot.