By STEVE YAHN, a writer based in Croton-on-Hudson, N.Y.,
who has written for and edited national publications for more than 30 years
CEOs at smaller agencies and regional insurance brokerage companies breaking into the Power BrokerTM winners circle for the first time see 2010 as a period of sustained expansion, a roundup by Risk & Insurance®
At times nimbler and more entrepreneurial than many of their larger rivals, these firms are committed to using the slow economic times to sow the seeds for future expansion.
Stuart Cohen, president of Stuart E. Cohen Ltd./Somers Agency, owner of City Builders Owners Inc., put it the most bluntly: "I make house calls," he said. House calls are important. They're the calls clients remember.
Cohen, a winner of the 2010 Power BrokerTM designation in the real estate category, said his agency was dedicated to focusing on small property owners to help them obtain the insurance coverage they need. Too often, he said, the small building owner is overlooked by the larger brokers, especially in New York City.
(Browse all of the winners throughout the 24 categories at our 2010 Power BrokerTM page.)
Like many owners of smaller real estate and insurance brokerage companies, Cohen decided long ago to survive, he needed to specialize, a strategy that has paid off. "As a direct result of our becoming well known as a specialist in this market, we have experienced double-digit growth," he said.
Every broker, he also said, wants to insure the more expensive co-operatives located in the city's toniest residential neighborhoods. The values are greater, yes, even in a recession, and thus the commissions higher. But, said Cohen, it takes a specialist firm to research the markets that best serve the small property owner, offering them the best coverage for the proper pricing.
In addition to serving the expensive Upper West Side and Upper East Side of Manhattan, his firm serves neighborhoods in Harlem, Bedford Stuyvesant and Jamaica--pockets where owners respond well to house calls.
For many brokers house calls are always a good recipe for growth. For other brokers house calls are not the only recipe for growth, however. Taking a broader, more strategic approach is just as valid, particularly during slow economic times when brokers can cultivate future business partners.
"In addition to growing our market share in Gary and Northwest Indiana, our emphasis will be on developing business in Chicago and the near suburbs," said Roosevelt Haywood III, president and CEO of Gary, Ind.-based Haywood and Fleming Associates.
In Gary, a gritty industrial town in the northwest corner of the state, Haywood noted that during challenging financial times for a blue-collar enclave like Gary, there's plenty of opportunity to provide value by delivering timely, targeted and innovative risk management solutions. "Our commitment to this process makes us a valued partner that retains the city's confidence and business," he said.
Since opening its Chicago office five years ago, Haywood and Fleming has established relationships with organizations such as the Alliance of Business Leaders and Entrepreneurs (ABLE), Chicagoland Chamber of Commerce, Government Contractors and Business Forum, Chicago Urban League and the Union League Club, to name a few.
When the market hardens again, that's when Haywood's efforts will bear fruit as his firm is now poised "as never before" to benefit from the personal and business connections built over the past few years.
"We are truly focused on working with very closely with our clients," added Haywood. "As a result, when the economic upheaval came about, we were already positioned and proving our worth."
Haywood is a 2010 Power BrokerTM winner in the public sector category, as well as a Responsibility Leader TM. (Find out more about this year's Responsibility Leader TM designees here.)
At employee-owned IMA Corp., Chairman and CEO Rob Cohen, based in Denver, said the economic downturn was an opportunity for his brokers and his firm, an opportunity on which he's already capitalized.
"We believe we are well positioned for the future," he said. "We have a relatively young management team and little or no debt. In addition, we are utilizing this downturn to invest in people and resources so that we will be positioned to capitalize when both the insurance marketplace as well as the economy changes."
"There is a tendency in this economic environment to hunker down," Cohen added, who has opened new offices in Kansas City and Dallas. "We view it as a time to invest in new specialties and top talent."
Sarah Finn, national surety senior vice president of IMA of Colorado Inc., was a 2010 Power BrokerTM winner in the construction category, and her colleague, Mark Ware, vice president and director in IMA's technology and life sciences practice, earned the designation in the technology category.
Whereas some of the nation's largest brokerage firms have gone through painful layoffs in order to improve their profit margins, the pain hasn't run as deep in the smaller agencies. At Louisville, Ky.-based Neace Lukens, for example, Chairman John Neace said, "The producer is king."
Maureen Gallagher, partner and workers' comp brand leader in the Michigan office of the firm, was named a 2010 Power BrokerTM in the workers' comp category.
Neace even expects his firm to expand activity in 2010--albeit with fewer people. "We plan to do more things with fewer people without affecting our producers' compensation," said Neace, noting that in 2009, the firm opened new offices in Arizona, Florida, Georgia and Tennessee; also in Ohio, Kentucky, Indiana, Michigan and Arkansas.
Neace Lukens plans for some big investments in technology, in which Neace is a big believer, both within his company and in terms of products for clients and prospective customers. Healthcare reform has also spurred the review of benefits programs, and a review of how benefits products are sold.
"We are creating new technology products and services, especially on the employee benefits side," Neace added. "We have created something called BeneSolve, which is a virtual human relations world. All information, both to companies and employees, is available 24/7."
Through its Maverick Insurance Group for smaller markets, Neace Lukens made investments in such cities as Cairo, Ill., and plans to make more such investments in 2010.
On the West Coast, brokerages also used the recession to position themselves for the future through diversification, according to brokerage executives.
"We think we are well positioned for future success," said Barney & Barney LLC Managing Principal/CEO Paul Hering. "We are a full-service firm with about a 50/50 split between commercial property/casualty business and benefits business. We have a statewide footprint in California with offices in San Diego, Orange County and the Bay Area. We are also an Assurex Global partner and service clients with global exposures."
Hering noted that his firm expects to grow 10 percent this year by expanding in Southern California's wealthy Orange County and the Bay Area in Northern California. "A key to our success is continued differentiation through the development of our practice group expertise," added Hering.
Mike Milligan, a principal with Barney & Barney, was named a 2010 Power BrokerTM in the pharmaceuticals sector.
Last year was special for the firm as it celebrated its 100th anniversary of its founding in 1909. To commemorate its centennial, the firm created the Barney & Barney Foundation and donated close to $200,000 to charities in its communities.
At Equity Risk Partners, San Francisco-based co-founder and CEO Michael Marcon said his firm has positioned itself to be responsive to the investment opportunities of its private-equity clients.
"Over the past few months, we have established our infrastructure and privatization group to assist private-equity firms investing in infrastructure deals as well, as to add value to the growing number of asset privatizations."
In addition, ERP created a healthcare blog to assist its clients in understanding the issues, costs and opportunities associated with the coming healthcare reforms.
Over the past two years, ERP increased its product and service offerings, redoubled the training of its staff on the nuances of private equity, enhanced its capabilities and understanding of the issues associated with investing in distressed assets, and streamlined its marketing function. During this period, the company broadened its client service capabilities.
"I believe we are very well positioned for both the coming economic recovery, as well as the coming, I hope, hard market," Marcon noted.
Tony Marcon, senior managing director and Michael's younger brother, was named a 2010 Power BrokerTM in the financial institutions category.
Michael Marcon noted that his firm was in a unique position because it is simultaneously the "ultimate" specialist (all of its business comes through private-equity firms) and the "ultimate" generalist (its private-equity clients buy assets in all industries, shapes, sizes and geographic regions).
"Two important issues facing our clients are heathcare reform and capital gains taxes," added Marcon. "These have the potential to hamper M&A activity. Our clients are waiting for the credit markets to reopen. Until then, it's wait and see.
"We expect to see increased activity in IPOs as an exit strategy and have significantly enhanced our capabilities to respond to clients' needed in that area," said Marcon.
At San Mateo, Calif.-based EPIC Insurance Brokers, Dan Francis, co-founder and CEO, said his company was "a unique alternative to both the large institutional brokers and larger regional firms."
"Our values-based culture and equity ownership opportunities attract experienced, talented professionals who thrive in an entrepreneurial, client-focused environment," he said.
"Since EPIC's founding in July 2007, our significant growth has come from a series of acquisitions as well as ongoing organic revenue growth," added John Hahn, co-founder and president of the company,
EPIC's footprint--with 290 professionals working from seven offices in California, Baltimore and Atlanta--is constantly expanding.
James Halbleib, executive vice president of EPIC, was named a 2010 Power BrokerTM winner in the real estate category.
In addition Allen Amos, a principal at EPIC, was named a 2010 Power BrokerTM finalist in the transportation category; and Jeff Parkhurst and David Alvarado were named 2010 Power BrokerTM finalists in the construction category.
(Browse all of the finalists, and winners, throughout the 24 categories at our 2010 Power BrokerTM page.)
At Boston-based Academic Risk Resources & Insurance, President Bonney Hebert noted that her firm is solely focused on educational and nonprofit clients. "We have an in-depth understanding of the organization, culture and operations of higher education and nonprofit institutions. This enables us to design products and deliver services that specifically address the risk inherent in this environment."
Added Hebert: "Our style is to be available and act as a seamless extension of our clients' risk management team to help them achieve their goals."
Diane Gould, senior account executive with Academic Risk Resources & Insurance, was named a 2010 Power BrokerTM winner in the education category.
Stephen Johns, president of Waterford, Mich.-based L.L. Johns & Associates, which serves companies that own/operate one or two turbine aircraft for commercial use, foresees another year of expansion for his firm in 2010.
"As the soft insurance market continued and the economy started to wane in the summer of 2008, we launched an aggressive marketing plan directed at our target market," said Johns, a winner of a 2010 Power BrokerTM award in the aviation category. "The campaign combines the rather traditional elements of phone and e-mail/written communication. We have been pleased with these efforts and plan to continue."
"I believe many of the challenges we are facing will continue well into the future," added Johns. "Despite these economic challenges, we're confident there is plenty of opportunity for growth and profitability within our niche."
"As for the outlook for our sector, I think some of our challenges will continue. We don't see any immediate sign of the aviation insurance market hardening," he said.
In January, the firm's light aircraft customers experienced an average rate reduction of 5 percent, and its business aircraft customers activity was in the range of 20 percent-plus. The aircraft sales market has seen some improvement, Johns noted, but aircraft purchases are still down significantly, and market inventories are up compared with past years.
"We believe we are well positioned in the marketplace," said Johns. "We have built strong relationships in the underwriting community and enjoy a team approach to serving existing clients."
February 1, 2010
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