By Caroline McDonald
Nice guys can finish first. How do you know a nice guy when you meet one? He buys a company and helps save jobs. Everyone likes working with him and business acquaintances turn into longtime friends.
Meet Brady Young, a principal owner, president and CEO of Strategic Risk Solutions Inc., a captive management company headquartered in Sarasota, Fla. Young has been with the company since its inception in 1993, when it was called Alternative Risk Solutions. Formed by Arkwright Insurance Co., ARS was later sold to Winterthur, the insurance arm of Credit Suisse.
It was as an employee of Credit Suisse that Young led the management buyout of ARS in August 2002, when Credit Suisse began to exit the insurance business.
"It was me, Mike O'Malley and Brent Clark -- who left SRS several years ago to pursue other interests," Young said. O'Malley is the company's senior vice president and managing director, responsible for delivery of SRS' consulting services.
"Not many people know this," Young said, "but the reason we bought SRS ... is that they decided to shut it down in May 2002 and gave us a 90-day notice. So, we turned a negative into a positive by offering to buy the company and take some of the staff involved in the captive and consulting side of the operation.
"We had no clue what we were taking on board," Young said. "Basically we bought a platform and a very small base of clients in Vermont and Bermuda. We thought we could make a mark as a high-service independent firm."
Because they had no sales staff and few clients -- and no distribution channel to acquire clients --"we decided to partner with independent brokers and agents that did not have strong, internal captive consulting or management capabilities."
It was a risk that worked out well, he said, "as these firms are handling larger accounts and competing very well with the large publicly traded brokers."
Meanwhile, SRS has "ridden on (brokers') coattails" and helped them service their clients more effectively. "We still have no plans to hire salespeople and believe this strategy works well for us."
One of those clients is Jim Hackbarth, president and CEO of Assurex Global, based in Columbus, Ohio.Hackbarth is also president of Professional Agents Reinsurance, or PAR Ltd., an errors and omissions insurer for large insurance agencies. Coverage is marketed under the name of E&O Plus.
PAR, a group captive, engaged the services of SRS about two years ago when it changed its captive-management company.
"We did a request for proposal, or RFP, and interviewed four or five firms," Hackbarth said.
"We did a rigorous due diligence and ended up selecting (Young's) firm.
"Every firm you talk to is going to put its best foot forward. Sometimes, you make the change and ... once they become engaged as a firm, the services they pitched fall off," he said.
With SRS, it was the opposite. "They've exceeded our expectations with the level of engagement -- there was no bait and switch," Hackbarth said.
One reason he decided to look for a replacement of his previous management firm, he said, was instability of the account team.
"Every year, because employees were leaving or there was a change of management, we were getting new faces," Hackbarth said. "It almost felt like we were training them. In this situation, the stability of the staff has been second to none."
Albert R. "Skip" Counselman agreed. He is chairman and director at Carrollton Bank, in the Baltimore area, and chairman and CEO at RCM&D Inc., an Assurex Global partner with offices in the Mid-Atlantic region.
SRS manages several captives, of which RCM&D serves as broker and consultant to the client. Counselman also has worked with SRS from the customer side, as a director of several other captives SRS is involved in managing.
"Our experience has been very positive and we've recommended them to many of our clients," Counselman said. "SRS is very responsive, they do things on time and they do things correctly. They know their business, they stay on top of things and they have outstanding professionals working in the organization."
While his experience is with Cayman and Bermuda, RCM&D has worked with SRS in evaluating other domiciles as well.
"It's a real plus that they understand the regulatory environment in each one of these different areas, offshore and onshore, and our clients are very satisfied -- as I am," he said. A bonus, he added, is that "they're nice people, besides. They're the kind of people you like to work with."
In fact, covering the industry from every angle has been a goal in building SRS, Young said. Members of the team are "a lot like me (in that) they worked in other places, for big companies." The SRS team understands what's important "and they want to work with people they respect. They want to be able to work with clients and not be tied up with bureaucracy."
Young's team includes former regulators Derick White, former director of captive insurance for the Vermont department of financial regulation for 16 years, and Craig Watanabe, who joined SRS in January 2011. Watanabe, deputy insurance commissioner and captive insurance administrator for the State of Hawaii for 10 years, oversaw a five-fold increase in the size of the captive insurance industry there. The team also includes former captive owners.
"Clients value those perspectives on issues that come up," Young said. "Even though we have separate offices, the collaboration and sharing of knowledge and information is excellent.
"While we're not as big as some firms," he said, "we play big, because we don't have a silo mentality. It's the culture we have, where people want to be helpful and supportive."
White, now president at SRS Vermont, left the public sector to join SRS in February 2008, because he "wanted to work at something where I could make my mark."
"A number of the managers (including Young) had approached me and the answer was always, 'No,'"White said. "But when I thought about what company I would want to work for, SRS was always the one that came out on top.
"Brady gave me the chance to make my mark in the private sector. That got some creative juices flowing that, after 16 years at the department, I'd forgotten I had," he said.
During the past four years, White and SRS staff added 20 new clients, giving them a total of 42 Vermont companies. Staff has doubled as well to maintain the original service.
The company's "Mid-South" office handles all captives in the East, other than Vermont.
"It's been a good match," White said. "We've done well."
Gary M. Cooney, vice chairman at McGriff, Seibels & Williams Inc., in Addison, Texas, fits the bill as a long-time business associate of Young's --they started working together at Arkwright. Now, he's a good friend.
"We've known each other for 20 years and I have had the pleasure of working with him for that period of time," Cooney said.
Cooney, a broker, said he often relies on SRS as a captive manager, based on a philosophy imparted early on by his father.
"My dad was in the business, on the insurer side," Cooney said. "He helped front some of the original captive insurance companies back in the 1960s."
His father, he said, "told me that being an insurance company is serious business, has serious responsibilities and can have serious consequences."
His father also told him that a captive is "not a toy and that a lot of these companies that want to have their own captive insurance companies need a carefully thought out and properly prepared strategy --and to avoid a conflict of interest, the broker and captive manager should be independent of one another."
This advice, Cooney said, "has stuck with me and we have preached that to our clients. I'm a believer the captive should have an independent manager."
While a broker is a valuable consultant in program design, structure and placing reinsurance for the captive, he said, "the execution, management and final decisions need to be completely independent of him. Brady has been that independent resource for me for 20 years."
Their business relationship, he said, is a "trusted partnership," one to which he entrusts his most-valued long-term clients, or "crown jewels."
"No man does it by himself," Cooney said, "and Brady has a great team of people," especially O'Malley, who he called "Brady's right-hand man. He does an incredible job."
Their physical presence -- both Young and O'Malley are taller than 6 feet, he said --and their intelligence give "you a feeling of comfort. That's what Brady and Mike have done for our clients, because they are a great team."
"We've become very good personal friends," Cooney said, "and I think that's the spice of life --particularly in our business, when you work so hard to build something and your best friends end up being the guys you're building your business with."
CAROLINE MCDONALD, a writer who has been covering insurance for more than 10 years, specializes in risk management issues. She can be reached at firstname.lastname@example.org.
July 24, 2012
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