Founded in 2011, AssuredPartners is the fastest-growing independent insurance brokerage in the United States.1 Currently the fifth-largest property and casualty (P&C) broker and 12th-largest insurance broker nationally, the firm is focused on middle-market clients.2 The company provides a unique combination of national scale, a wide range of products and services, and deep local presence, which allows for higher retention and margin expansion.
Recently, Apax Partners sold a stake in AssuredPartners to GTCR, a Chicago-based private equity firm that had previously invested in the company before selling its ownership to Apax in 2015. Here, Harris Williams Managing Directors Bob Baltimore and Derek Lewis and Director Anthony Basmajian share their insights on what made AssuredPartners a standout investment opportunity.
1. What makes this an appealing space for buyers and investors?
Baltimore: “Growth is one factor, both organic and via M&A given the amount of fragmentation in the space. There are many small brokerages across the country, providing plenty of opportunities to build larger platforms.”
Lewis: “This is also a cycle-resistant segment: Businesses generally keep their insurance current no matter the economic environment. And they generally keep their insurance broker, too. Good brokerages tend to have very ‘sticky’ customer relationships. Once a strong relationship is established, people tend to stay with their broker.”
Basmajian: “I would also add the strong cash flow characteristics of many of these businesses. Capital expenditures are typically very low, and there’s a significant amount of steady, recurring revenue.”
2. What made AssuredPartners particularly appealing to its buyer?
Lewis: “AssuredPartners is an established M&A engine. The management team knows how to buy smaller brokerages and integrate them quickly and effectively. That has allowed them to not only grow, but also to create national scale with local presence. They have strong local brokerages with deep relationships, as well as favorable carrier relationships, access to innovative products, a multi-dimensional product offering, and deep institutional knowledge.”
Basmajian: “I’d add their focus on the middle market. They serve companies that have complex insurance needs yet lack the scale required to have leverage over an insurer. AssuredPartners’ clients truly need a broker to get good rates and navigate their coverage options. They also need a broker that understands their specific industries, and AssuredPartners has deep vertical expertise.”
Baltimore: “They also focus on their people. The company is very good at incentivizing and aligning their salesforce, and they have some of the top producers in the industry.”
3. What advice do you have for other buyers and investors interested in the space?
Baltimore: “Insurance brokerage is a great place to invest regardless of the business cycle, and it has strong fundamentals, so competition for the best assets is intensifying. But there remains an opportunity to build small platforms out of individual brokerages and sell them to larger players, who continue to consolidate the market.”
Lewis: “If you are considering that strategy, keep in mind the factors that have made AssuredPartners successful: Focus on a specific market or vertical segment, seek brokers with strong local relationships, and emphasize the best sales talent.”
Published May 2019
1. Business Insurance Largest Broker of U.S. Business (July 2018)