2006 Champion Keeps Growing

Catching up with last year's champion in the National Underwriter Commercial Insurance Agency of the Year Award program finds the firm expecting “another record year in profitability and revenue,” according to Chief Executive Officer Paul Hering.

Much like this year's finalists, what stood out about the San Diego-based Barney & Barney was its emphasis on risk management. Providing such services is not a fee business for the firm but part of the culture of improving a client's risk portfolio.

That dedication to risk management has not changed despite the pressures of the soft market in all but coastal property markets, Mr. Hering insisted.

“Given the soft property-casualty market, we've struggled like others a little in that area,” he conceded. “But we have been able to get new business to replace the drop in rate. A lot of that new business is being written by the young producers we invested in years ago.”

“We continue to invest in the risk management side of our business,” he added. “We have heavily invested in safety and claims advocacy, and have hired more people on that side. This enables us to work closely with clients to bring their claims down and is a real differentiator [from our competitors]. Business is very good.”

Last year, Barney & Barney reported revenues of $47 million. This year the firm expects to do somewhere around $52 million, despite falling p-c prices, Mr. Hering noted. In the last seven years, he said, the agency has grown threefold.

“It is a challenge growing profitability, but we are still investing in services to our clients,” he said, suggesting that in a soft market other brokers might feel pressure to cut risk management services, but not B&B. “It has become a core to our customers.”

One change is that Barney & Barney opened its first branch office–in Orange County, about 60 miles north of the main office–and is expected to contribute around 5 percent to the firm's revenue this year. He attributed the office's success to the simple fact that they are doing business “differently from a lot of others out there.”

While B&B has depended on organic growth to prosper, Mr. Hering said the brokerage is warming to the idea of making acquisitions, and is “more open-minded to the need to grow and expand.” It would be the first acquisition for the firm in 25 years.

He said a deal could happen within the next 12 months, but if an acquisition takes place he was adamant that B&B would remain “in the control position.”

The firm's workers' compensation captive program for technology and life-science centers remains active and profitable despite the downturn in rates. He noted that comp rates have dropped close to 45 percent since reforms took place a couple of years ago, but the program remains a “significant contributor” to agency revenues.

During its year as NU “champion,” Mr. Hering said B&B has highlighted the honor in its marketing and that it helped in “opening doors for us.”

“The recognition is a great source of internal pride,” he said. “It has increased opportunities to meet with new clients, and has probably won us some business.”