E-Risk Services has completed a management buy-out from Wachovia Corporation on the same day the bank was acquired by San Francisco-bank Wells Fargo & Company.
Terms of the E-Risk deal were not released.
Paul Tomasi, president of the Flanders, N.J.-based online managing general agency said E-Risk is very optimistic about its future in its niche.
"We feel very good about our growth potential going forward," Mr. Tomasi said. "We will be able to operate and control our destiny. We are very excited about this."
E-Risk provides an online suite of management liability insurance products for privately held and not-for-profit organizations through its "Business and Management (BAM)" package of products. The MGA writes about $90 million in premium.
Founded in 1998, E-Risk was acquired by Wachovia in 2002 and remained a division of the bank until yesterday, Mr. Tomasi explained.
He said E-Risk management was in discussion with Wachovia for about a year, long before the merger talks began between the bank and Wells Fargo. Mr. Tomasi added that there was a feeling at the time that E-Risk was not a strategic fit for Wachovia and that the management buy-out made the most sense.
The current management team making the deal consisted of Mr. Tomasi, Michael Bigger, Neil Kransdorf, Steven Dyson and Neil Coffee.
As E-Risk announced its independence, Wells Fargo said it completed its merger with Wachovia, which included the acquisition of its insurance brokerage services.
According to Robert J. Lieblein, managing partner with Hales & Company in Harrisburg, Pa., who discussed the deal at the time it was announced in early October (See National Underwriter Magazine, Oct. 20, page 10), the deal would make Wells Fargo the fourth largest broker in the country with about $1.7 billion in insurance revenue and 213 offices throughout the country.
In a statement, Wells Fargo said it would be the largest bank-owned insurance brokerage in the country. It also said it plans to proceed with a three-year integration plan between the two entities.
Discussing E-Risk's future, Mr. Tomasi said future growth of the firm depends on convincing and educating business owners of the value of management liability insurance products. What many business owners–especially small business owners–fail to realize is the true value of management liability coverage. He said, noting that the suite of products goes beyond coverage of individual officers and directors and provides indemnification to the business entity itself.
The small business market share the firm is aiming at is about $38 billion, underscoring the tremendous opportunities for E-Risk going forward, he added.
Mr. Tomasi said the firm has the online technology to efficiently handle these accounts. The firm will be working with the Scottsdale Group as its issuing carrier.
Additional information about E-Risk is available at www.eriskservices.com.
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