By CYRIL TUOHY, managing editor of Risk & Insurance®
Even in the recent tough economic climate, the top executive at Integro Insurance Brokers is convinced the market has accepted his alternative to the "big box" insurance
That model, based on acquiring smaller brokers and then rolling them up into the larger parent company, has been a favorite of ABC competitors Marsh, Aon and Willis to fuel growth.
It is a model that has dominated the distribution of complex risk products and services to the Fortune 500 for the last 20 years at least--a strategy that has been received with mixed results.
So then, if the roll-up model is ripe for serious challenge, why has Integro gone and opened its wallet?
Integro's recent acquisitions are "entirely consistent" with what the young brokerage firm is after, said Peter F. Garvey, Integro president and CEO, during an interview with Risk & Insurance® on July 7.
The goal of Integro--Latin for "make well, make better"--has always been consistent, Garvey said. The firm is after top people capable of brokering and serving companies with the most complex risks.
"The alternative model I'm referring to is client-focused, recognizes that people matter, focuses on organic growth versus roll-up strategies, and emphasizes the importance of quality service as opposed to transactional services," Garvey said.
According to Garvey, who added the title of CEO in 2008, he isn't in the business of buying other people's businesses because of premium or commission income.
Integro is foremost in the business of buying expertise, said Garvey, a former Marsh executive.
... which is why earlier this year, on Jan. 4, Integro announced the purchase of the bulk of the assets belonging to the Lloyd's specialist marine broker London Market Insurance Brokers Ltd.
... why in December 2009, Integro announced the purchase of Mamaroneck, N.Y.-based personal-lines agency William E. Kelly Agency Inc. and folded it into its Private Client Service Group.
... why in November 2008, Integro (Canada) Ltd. announced the acquisition of the Montreal-area Gerald H. Kuehne and Associes Inc.
... and why in November 2005, six months after the company was launched, Integro announced its first purchase, the professional-liability and medical-malpractice Lloyd's broker Humphreys Haggas Sutton & Co. Ltd.
Not a roll-up model?
No, insisted Garvey. "We're not a roll-up model, but we will make acquisitions."
"We want good people, period," Garvey added. "If they work for somebody else, we want to hire them, or if they work for themselves and their own firm, we want to buy their firm as long as it also makes strategic sense."
Hence the Kelly purchase, for example. Serving the high-net-worth segment--individuals and families--is a complex risk given the breadth of coverage required by some of the wealthiest people in the country, Garvey said.
"They want advice and methods of outsourcing the risk surrounding what they own, be it a yacht, an art collection, aircraft or unique memorabilia," he said.
People and institutions who own big, expensive or rare boats know that the Kelly Agency was the best in the business, Garvey said. That's why Integro bought it and folded it into the firm's Private Client Services group.
Integro's four acquisitions in the space of five years come to less than one acquisition a year on average. In a busy year, a Marsh or an Aon is capable of closing on at least that many deals.
Some have gone even farther. A.J. Gallagher & Co. racked up 34 acquisitions in 2008, according to its SEC filings.
So, yes, you could say Integro isn't strictly a roll-up model. But neither is it completely "organic" either.
July 9, 2010
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