Buyers to Integro: Prove Yourself First, Then We'll Talk

With some ballyhoo last spring, the startup of Integro was announced by three former top Marsh brokerage executives. The new firm, with the backing of more than $300 million in equity capital, began an aggressive effort to recruit and hire some of the most experienced and talented brokers in the business.

Integro attracted brokers from all the large firms, but most joined up from Marsh, probably because of top management's longtime ties to the firm and the cutbacks at Marsh that followed the investigations, charges and eventual settlement with New York Attorney General Eliot Spitzer.

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Integro's stated market--the largest and most complex risks--overlaps the market of the three biggest brokers. Since Integro started, there have been ongoing announcements of impressive new hires and, on the street, rumors of enormous signing bonuses abound. Publicly, the top executives say they expect to have nearly 500 employees on board by their first anniversary and, to date, they're about halfway to that goal.

If the brokerage business is built on long-term relationships with individual brokers, then Integro's business should be booming. But startups are risky, and it takes time to change existing broker relationships. Dozens of risk managers interviewed for this project expressed substantial skepticism about Integro. For example, the chief risk officer at one of the largest U.S. manufacturers, who has met with brokers from Integro, said he was taking a wait-and-see posture with the firm. "I can't go to my management and tell them we're putting some of our key risks in the hands of a startup," he said. "I'd give them another two years, and then maybe we can talk about seriously looking at what they have to offer."

Almost all the risk managers interviewed confirmed that there have been some substantial changes in how their companies do business today compared with just a few years ago. Many remain happy and devoted to brokers who have worked with them for many years. Transparency in billing is critical, and there is still concern about past problems at Marsh, probably because risk managers at large companies report to top management and the board of directors. Most companies now have more than one broker and divide the business by expertise. One broker might handle significant D&O risks while another may handle the property placements. That may open up opportunities for Integro.

In the research for this project, risk managers often mentioned Integro brokers when assessing the community of brokers in their industry practice area. But most risk managers felt uncomfortable or refused to endorse any Integro broker as a "Power Broker" until the firm has been in business for a few more years. Meanwhile, a number of smaller firms, like Beecher Carlson, Lockton and Arthur J. Gallagher, seem to be benefiting from the upheaval in the brokerage community, gaining both business and adding key brokers to their staffs.

One risk manager summed up the attitude toward Integro, "They've got some great people there, but I can't take that kind of a risk even if their people are the absolute best in the business."

February 1, 2006

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