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By DAN REYNOLDS, senior editor of Risk and Insurance®

With the news that New York-based Integro Insurance Brokers' CEO Roger Egan was leaving the firm in September, the whispers began anew, that is, if they ever stopped at all.

Not true, said Garvey, with whom Risk and Insurance® spoke at the American Bankers Association Insurance Risk Management Conference and Annual meetings in late January in Weston, Fla.

Integro has engaged in some cost-cutting, that is true, said Garvey, who added that the firm considers itself lucky to have done that restructuring in September, about a month before the valuations of U.S. companies dove the way they did.

"Things are going extremely well for us right now," said Garvey. "We got out ahead of what's going on. We got a bit lucky. We adjusted the size of our platform in September for the slowdown in growth over all, across the business, but we did grow last year by 21 percent in our client revenue," Garvey said.

And, as of late January, according to Garvey, the company had already grown for the month at a 35 percent clip over the year before. Nothing wrong with that, nor is there anything wrong with some other financial information Garvey shared with us on that balmy day in Florida.

"We ended the year in a substantial cash position. We have no debt, so we don't have the deleveraging issues that are affecting most businesses today," Garvey said.

BACK TO THE WHISPERS

And what does he have to say about those whispers?

"Since we started three and a half years ago, people have been saying that it's only a matter of months until we're out of business, and that is what I mean by the misinformation, it is just patently untrue," said Garvey.

"And especially now, as I said before, we're debt free.We have lowered our operating costs to the point where we are in total control of our destiny. We have a more-than-adequate cash position and we are not burning it, and so we are in a very healthy spot, "Garvey said.

In addition to the fact that the company is debt free, Garvey said he still considers Integro's chief advantage going forward that it isn't as big as its larger competitors and can provide the kind of service that is going to continue to differentiate it in the market.

"In the near term, most risk managers believe, as do most brokers, that the importance of differentiating one client's risk from others like them has never been more critical. There isn't a lot going on to broadly control increase in pricing, so the individual differentiation and intimate knowledge of the risk is more important than ever. And that I think speaks strongly to the value of individual brokers and their capabilities, so naturally a broker that specializes in complex risk in certain industries and lines like ourselves is going to do well in this market. And so far we have seen that that is true," Garvey said.

NOT IN THE M&A GAME

Despite a down market, brokerage acquisitions continued apace in 2008. With banks and hedge funds largely staying on the sidelines, brokerages like Arthur J. Gallagher & Co., Brown & Brown Inc. and Hub International Ltd. continued to stay very active in the acquisitions realm.

According to the Washington, D.C.-based Council of Insurance Agents and Brokers, the number of announced acquisitions in 2008 was around 253, but it's widely believed that only half of brokerage acquisitions are announced, so the figure could be closer to 500.

Integro had only one announced acquisition in 2008. In November, it announced the acquisition of Longueuil, Canada-based Gerald H. Kuehne and Associates Inc., a surety brokerage.

Garvey was sounding like he believed bigger isn't better.

"There is an argument to be made that a professional services firm can become too large to be useful to its client base, and I think this has been happening and the brokerage world is over consolidated. You know the big brokers describe themselves as specialists because they specialize in everything, which is another way of saying you're a generalist," Garvey said.

"They start to speak in terms--and I'm not getting down on brokers--I think with a lot of businesses they start to become internally consumed by large-scale issues facing them that they forget why they originally formed the firm in the first place: to serve individual clients," Garvey said.

There, the man's said his piece. Now what do the whisperers say to that?

February 17, 2009

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