A soft market hasn't stopped excess and surplus lines industry veterans from building and launching businesses–and wholesale brokerages have been as active as carriers in the early part of 2010.
The biggest announcement, and the most recent came from Charlotte, N.C.-based AmWINS Group, which unveiled its acquisition of Dallas-based Colemont in April–creating a wholesale giant that will distribute over $4.8 billion in annual premiums with more than 1,800 employees in 16 countries worldwide.
Earlier in the year, two industry veterans–Glenn Hargrove and Patrick Ryan–launched brand new wholesale brokerage service operations, with each saying their startup teams planned to put a different stamp on the business of wholesale distribution.
The AmWINS move stands out in magnitude at this point, although financial terms of the acquisition were not disclosed.
"This is a big deal and could be the sign of things to come," said Audra Szollosy, senior vice president for the agency consulting firm Hales & Company (which was not involved in this deal).
After a very quiet 2009 in regard to merger and acquisition activity, she said this could be a sign of the beginning of additional consolidation, possibly among the top-10 insurance wholesaler brokerages.
She also said the AmWINS-Colemont combination–operating under the AmWINS group name going forward–could put the firm ahead of CRC Insurance Services, which reportedly has over $3 billion in premium and is owned by the Winston Salem, N.C.-based bank BB&T Company.
While Ms. Szollosy referred to CRC as the largest p&c wholesaler, Roseland, N.J.-based Crump Group may actually be larger than CRC and AmWINS overall.
During an NU interview in October 2009, John Jennings, vice chair of business development for Crump's Property & Casualty Insurance division, who was then president, put Crump's total premiums–including life insurance and employee benefits–at a little over $5 billion, with p&c producing roughly $1.5 billion.
HARGROVE LEADS MSW
In March, Glenn Hargrove, a former chief executive of Crump Inc., took the helm of a brand new wholesale service operation–MarketScout Wholesale–launched by the Dallas-based electronic insurance exchange MarketScout, which publishes the monthly "Market Barometer" survey of retail p&c pricing trends.
Mr. Hargrove, president and member of the board of MSW, told NU that the new platform will be part wholesaler and part consultancy, with the latter part helping retail producers meet long-term operational objectives and to scope out areas of opportunity.
Since leaving Crump, Mr. Hargrove said he spent the past two years as a consultant while still under contract with his former company. "I got to see a lot of carriers and marketplaces," he said. "What struck me was that the majority of wholesale models have become very, very similar. There is very little differentiation factor as to how they do their business. The wholesale business has not evolved much in recent years."
Seeing the need for change, he said he now has time to team with MarketScout and launch a new model. Speed and efficiency are the primary goals, he added, noting that the new model will utilize MarketScout's 12 years of experience as an e-commerce platform that allows agents nationwide to access a very efficient system.
Beyond that, Mr. Hargrove envisions differentiating MSW by engaging with producers at a strategic level–offering solutions tailored to a long-range approach of developing and building facilities for producers, and advising them on new areas where they can compete.
It will not be the traditional approach of binding and transacting business, he pointed out. Instead, the approach will be to understand a producer's long-term objectives, and bring tools to the table to accomplish those goals and build business.
In other words, MSW will act as both a traditional wholesaler and offer the same benefits of a quality consultant.
"If we are going to keep the value proposition of the wholesaler to the retail community fresh and vibrant, it is important to have somebody out there who creates some alternatives to the current business model," observed Mr. Hargrove. "The last thing the market needs is just another wholesaler. If you can't provide quality senior-level people, then no business is going to [come to you for] services."
RYAN LEADS RSG
Mr. Ryan, former CEO of Aon Corp., expressed a similar view when he spoke to NU after announcing the launch of Ryan Specialty Group in February. Mr. Ryan said RSG would be differentiated by a team of "unusually talented people."
Now is the time to bring fresh capital to the table "and make a difference to the client," he said, insisting that those who wait for hard markets–which are short in duration–miss opportunities.
According to a February announcement, Mr. Ryan's group embarked on a strategy of launching and developing a collection of managing general underwriters, managing general agents, wholesale brokers, and a service platform for agents and brokers under the RSG banner.
RSG's first MGU subsidiary–ThinkRisk, specializing in media liability–actually began business in December, before the February strategic announcement.
The February statement also announced the appointment of another industry leader–Timothy W. Turner–as RSG's managing director. Mr. Turner is a 25-year veteran of the industry, who in his most recent prior position was president of CRC Insurance Services Inc.
RSG also announced the launch of Ryan Specialty (Europe) Ltd., an MGU specializing in financial lines products. The U.K.-based MGU is being led by Chief Underwriting Officer Malcolm Nightingale, a 50-year veteran of the space.
AmWINS BUILDS
AmWINS is also expanding outside the United States with its acquisition of Colemont marking the wholesaler's first foray into the international marketplace.
"We have studied and evaluated many opportunities to grow our firm beyond the U.S. borders," said President Skip Cooper. "The opportunity to build upon the international network and capabilities of Colemont Global Group is an exciting part of this combination."
Colemont Global Group, the company's International Division, is one of four operating divisions of the combined group. CGG operates as a full-service, worldwide insurance and reinsurance brokerage network headquartered in London with more than 25 offices in 16 countries.
The other three operating divisions are:
o AmWINS Brokerage, which distributes property and casualty and financial services products through retail brokerage clients.
o AmWINS Underwriting, the managing general agent.
o AmWINS Group Benefits, which designs, distributes and administers specialty group insurance products through retail insurance brokerage clients.
The combined firm will be led by M. Steve DeCarlo as chief executive officer, Mr. Cooper as president, and James Drinkwater as president of the U.S. Brokerage division.
Rounding out the team are: Sam Fleet, president, Group Benefits division; Michael Lapeyrouse, Underwriting division leader and president, The American Equity Underwriters Inc.; and Surinder Beerh, CEO of Colemont Global Group.
(Additional reporting by Susanne Sclafane)
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