By DAN REYNOLDS, senior editor of Risk & Insurance®
Last week's merger of Charlotte, N.C.-based AmWINS Group Inc. and Dallas-based Colemont Insurance Brokers has resulted in a company that will do about $4.8 billion in business annually on behalf of individual retail insurance brokers who need the company's service in placing excess and surplus (E&S) lines business in London and Bermuda, executives said.
Those are big numbers for the E&S market, which in the United States in 2008 totaled $34.4 billion, but the new company has no intention of getting too aggressive with carriers, executives said.
"Obviously, we will be quite large, we are not an organization that will try to flex our muscle but by having relationships throughout the organization with all of these markets we can make sure that we find the best home for the insured as well as for the retailer, who is our client, as you know," said AmWINS CEO Steven DeCarlo.
"The acquisition of Colemont broadens AmWINS' geographic footprint both here in the United States and internationally," agreed Matthew F. Power, an executive vice president with the Boston-based Lexington Insurance Co., the nation's largest E&S carrier.
"This is an organization with a very strong management team and deep talent pool. It is a wonderful opportunity for both organizations to develop real synergy from each other's core strengths," Power said.
AmWINS, with about $3.5 billion in annual premiums, was by far the bigger company of the two. Colemont was doing about $1.3 billion in annual premiums.
Despite the difference, the transaction was a merger and not an acquisition, said William Nichols, an AmWINS spokesman.
If you measure size by E&S wholesaling premiums, AmWINS is now the largest brokerage of its kind located in the United States, according to Nichols.
It was the business that could be wrought outside of this country that made Colemont such an attractive partner. "The whole international platform is really exciting to us," DeCarlo said of Colemont's international relationships.
"They have great relationships on both the client side and the market side. And the leader Surinder Beerh is really well respected across the international insurance marketplace," DeCarlo said.
In this new configuration, Beerh will serve as CEO of the London-based Colemont Global Group, which will be one of four AmWINS Group divisions. Colemont Global will populate 25 offices in 16 countries.
The other three AmWINS divisions are AmWINS Brokerage, which will distribute property/casualty financial services products through retailers. AmWINS Underwriting covers contractual underwriting agreements with insurers. AmWINS Group Benefits designs, administers and distributes group insurance products through retailers.
Industry analysts see the move as a double win for AmWINS because they expand their market and absorb a competitor.
A retail broker who said he has used both AmWINS and Colemont in the past said he doesn't expect his relationship with the new entity to change just because the single company he is dealing with is now larger.
"When it gets down to the nuts and bolts of it we always look for the people on the wholesaler side who either get the job done or they don't, and they either have the relationship or they don't," said Richard Hylant, president of the Hylant Group, a Toledo, Ohio-based regional broker that has used both Colemont and AmWINS to place excess and surplus business.
"And they could be a one-man shop for all I care," Hylant said.
U.S.-based retail brokers like Hylant need a wholesaler like the AmWINS Group because of the relationships the wholesaler has with insurers and reinsurers in London and Bermuda.
"They can get that deal done better than we can even with our own direct relationship," Hylant said. "That is how they separate themselves and that is the value added."
There's little overlap between the two merged companies, DeCarlo added. "At the individual level, we generally don't have the same clients so we see the retail relationships as being incremental," DeCarlo said.
"I don't think there will be a lot of cannibalization of accounts which is really good," DeCarlo also said. "I don't think there will be a lot of duplicative overlap at the field level. There will be some corporate overlap but that is to be expected in transactions like this."
April 20, 2010
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