Home Posts tagged HUB International
Insurance Special Coverage

Come Together

Timm Marini

Timm Marini says HUB has become more “laser-focused” in the way it grows.

If you think you’ve seen more headlines than usual lately about insurance agencies being bought and sold, you’re not mistaken. In fact, 2021 was the fifth straight record-setting year for M&A activity in the insurance world. The reasons range from federal fiscal trends to a desire to broaden an agency’s expertise; from pandemic fatigue to the aging of the Baby Boomers who built and grew many of these firms. The idea, area leaders say, is to grow strategically, with customer service and company culture at front of mind.

HUB International is no stranger to mergers and acquisitions in the insurance world; they have long been a key element of the company’s growth, nationally and globally.

“For us and some of the bigger acquirers, we’re getting more laser-focused in what we do,” said Timm Marini, president of HUB International New England. “It used to be you acquired to grow — and grow profitably. And then it became geographic expansion, where you wanted to find some agencies in places where you weren’t.

“In the last 18 to 24 months, it’s gotten more laser-like,” he went on. “When I say that, I mean looking for specialists or looking for specialty shops that may bring in different disciplines, like medical malpractice, life sciences, startup companies, or financial services. In the last two years, we’ve acquired 50 investment firms across the country, four or five of them in New England alone.”

Still, even at a firm with that kind of record, the sheer pace of M&A activity in recent years has been striking, Marini said. Last year, a record 798 insurance agencies were sold in the U.S. — breaking the previous records of 711 in 2020, 653 in 2019, 580 in 2018, and 557 in 2017.

“Part of that was the pending increase in taxes — people were nervous the tax rate was going to go up significantly, and that may have given some of them the impetus to sell,” he noted.

Phil Trem, president of Financial Advisory for Marsh Berry, a leading M&A advisory firm for the insurance industry, noted the same dynamic.

“The heightened activity can be traced back to a number of different factors. Firms who sold believed that they might be negatively impacted by a potential federal capital-gains tax increase and a shift in expectations by the insured community,” he wrote on the firm’s blog. “While tax legislation was not enacted in 2021, there are still looming concerns that it could happen at some point in 2022. Will it be retroactive? Anything is possible, but at this point concern about a significant tax increase has waned.”

But other factors have been in play as well, Marini said. “I also think there’s some COVID fatigue in the marketplace, folks dealing with all the extra issues we’ve all had to deal with. Plus, honestly, the multiples folks are paying for these companies are significant.”

John Dowd, president and CEO of the Dowd Agencies, agreed, calling the current landscape a “feeding frenzy” marked by “irrational exuberance” on the part of buyers. “We look at what’s a good fit, what’s a fair price. We’re not going to chase.”

Dowd, whose own firm has made some key additions recently (more on that later), sees a demographic shift in play as well.

“Baby Boomers, who built this modern-day economy and have been a powerful force in every industry across the country, have been retiring to the tune of 2 or 3 million a year. That obviously includes every segment of the economy, including insurance agencies,” he noted. “A lot of agency owners have reached the point of retirement, and if they don’t have an internal succession or perpetuation plan in place, they might look to sell to somebody. That’s what’s going on out there.”

John Dowd

John Dowd

“A lot of agency owners have reached the point of retirement, and if they don’t have an internal succession or perpetuation plan in place, they might look to sell to somebody.”

As for that feeding frenzy, Dowd and Marini both noted that agencies are being sold for multiples of the EBITDA (earnings before interest, tax, depreciation, and amortization) valuation formula that would have been uncommon just a decade ago.

“Our business models haven’t changed, so why have these multiples suddenly gone so much higher?” Dowd wondered. “It’s causing people to maybe sell sooner than they had planned, thinking the multiples will go away sometime, and they don’t want to miss out on an opportunity to monetize their asset.”

 

Pathways to Growth

There are two ways of growing an insurance company, Dowd told BusinessWest. One is organic.

“That’s what we do every day, trying to attract more customers and certainly hold onto and retain those we already have,” he said. “Then there’s growth through acquisition. Our philosophy and strategy is to do both. Any business plan is going to focus on growth, profitability, and retention. When you put together your growth plan and have a healthy balance of organic growth and growth through acquisition at a pace you can accommodate and not stress your staff and your balance sheet, that’s what we consider a good, strong, healthy philosophy for growth.”

Marini said HUB has made targeted investments in niche-specific talent as a way to better serve customers, but has also not shied away from acquiring good-sized firms in the region — like the Insurance Center of New England in 2019, a move he called a strong “cultural mesh” at the time, similar to the one HUB found when it acquired his former firm, Field Eddy, five years earlier.

Over the past year or so, the Dowd Agencies acquired two local agencies, J. Raymond Lussier Insurance and Wilcox Insurance Agency, citing a similar cultural fit.

“When I talk about a good fit, it’s book of business, carrier representation, geographic location, and, most important, cultural fit,” Dowd said. “By that, I mean, are the current owners sharing the same philosophy that we have in terms of how they treat clients and how they treat staff? When there’s a good match in those two areas from a cultural standpoint, we can begin to move forward with analyzing the proposal that’s on the table.

“Not every prospective agency is a good fit for acquisition,” he went on. “We know the metrics we look for, and we have to check the boxes before we start to move forward. We can’t grow for the sake of growing; we have to do it incrementally and selectively. That’s our philosophy. We see people out there acquiring agencies all over the place; they’ve got their own philosophy, and we have ours.”

Elaborating, he called Lussier and Wilcox good examples of strong cultural fits. “We’ve known these owners for years. We know how important a priority their customers were. It was very important to these owners that their clients, who they worked very hard to build over the years, are going to be well cared for by the new owners, treated similarly and respected and serviced at the level they had become accustomed to.

Phil Trem

Phil Trem

“The build-versus-join decision is bringing a lot of firms to the deal table. This dynamic is not going away, and the market will likely continue to be very robust.”

“The proof is in the pudding,” Dowd added. “Lussier came on a year ago, and Wilcox was six months ago, and they have blended beautifully with our staff. We’ve had some get-togethers as a team where everyone gets to meet and know one another.

“That careful vetting is really important so there’s not any disruption to service to clients, that it’s seamless and smooth, and everyone is comfortable,” he went on, “because people get anxious when there’s change. It’s natural. To the extent we can, we want to address and dispel those concerns before, during, and after the transition. And it’s worked well.”

A larger agency with a broader range of specific expertise is important to customers these days, Marini said.

“Customers are demanding more service for the same dollar amount,” he noted. “And then, industry experts who know the nuances of different coverages can negotiate better premium deals with their carriers.”

It’s a win-win, in other words.

“One major driver of sellers coming to the table is evolving expectations of brokers’ clients, the buyers of insurance,” Trem wrote. “Since the beginning of the pandemic, insureds have created an expectation that their broker act as a consultant, not just someone who helps purchase insurance coverages. The end client is looking for someone who can help provide strategic guidance, risk management, and/or mitigation services.

“This creates a conundrum for insurance brokers who must keep investing in tools, resources, and talent in order to effectively compete,” he went on. “Independent brokers have to decide whether they want to use their cash flow to make these investments or partner with a firm that has already done it. The build-versus-join decision is bringing a lot of firms to the deal table. This dynamic is not going away, and the market will likely continue to be very robust.”

 

Bigger and Better

Building broader and deeper expertise in an insurance agency is one way to counter the bottom-line-focused direct writers, Marini said, especially on the personal-lines side, where they continue to grow market share in New England. And not just expertise, but relationships.

“We don’t want to be big just to be big; that thinking was 10 or 15 years ago. Now it’s getting big to be good, or just being good … and part of that model is having independent expertise, services, and claim advocacy like never before.”

He noted that HUB has won some national awards for its COVID-related communication about how the industry should react and deal with all the different challenges the pandemic has wrought. “We’ve had some competing brokers, large companies, bigger than us, grabbing those materials for their customers. We didn’t protect it; we shared it.”

Dowd agreed that M&A activity often focuses on what it brings to customers, from a broader carrier mix to specific expertise. While the mergers with Lussier and Wilcox focused more on the shared culture, he added, any benefit to customers is a factor when considering an acquisition.

Nationally, those mergers and acquisitions will continue to be a major story in the insurance world. After five straight years of setting new records for M&A activity, Trem doesn’t see a major slowdown in 2022.

“Buyers and investors are continuing to push their way into the marketplace,” he wrote. “If anything, the pandemic reminded the financial community what a great investment the insurance distribution space is and that demand is greater than ever before. It is a very favorable seller’s market because there is still more demand than there is quality supply.”

 

Joseph Bednar can be reached at [email protected]

Daily News

EAST LONGMEADOW — HUB International Limited, a full-service global insurance broker, announced it has acquired the assets of Epstein Financial Services LLC and Epstein Financial Group LLC. Terms of the transaction were not disclosed.

Located in East Longmeadow, Epstein Financial is an independent registered investment advisor providing corporate retirement-plan consulting, compliance, and regulatory guidance, as well as wealth-management services. The agency’s experience and resources help clients maintain a successful retirement program that will assist their employees to achieve financial security.

Charlie Epstein, principal and founder of Epstein Financial, will join HUB Retirement and Private Wealth in HUB New England.

“We are excited to deepen our current capabilities with the exceptional marketing and sales expertise of Charlie and his team,” said Timm Marini, HUB president of Western New England.

This move continues to strengthen HUB’s retirement and wealth-management services (HUB RPW) with the addition of talent and resources to develop more comprehensive strategies for clients. HUB RPW works to help plan sponsors create an offering that aligns with their business strategy, navigates fiduciary risk, and helps employees pursue their financial goals. The several registered investment-advisory affiliates in HUB RPW provide investment-advisory services to clients whose total assets are approximately $105 billion.

Epstein Financial was represented by the consulting firm Wise Rhino Group for the transaction.

COVID-19

EAST LONGMEADOW — HUB International is responding to numerous inquiries asking for more guidance through the coronavirus crisis by holding a webinar on Tuesday, March 24 from 2 to 3 p.m. To sign up, click here.

The novel coronavirus crisis is impacting businesses in all industries in significant ways. As reports of the disease spread, so do concerns about supply-chain disruption, business operations, and employee safety and well-being. A panel of HUB International specialists will deliver an executive overview of the critical issues businesses need to consider and plan for as they navigate through this pandemic.

This webinar is intended for business owners, executives, and HR leaders who need to make strategic decisions on how to manage their day-to-day business operations while mitigating risk and supporting employee health and safety.

Topics will include business continuity planning, and how to quickly develop a crisis plan to address this current scenario; insurance coverages that may apply and how to approach the claims process; pay continuation, leave, and employee-benefits issues for U.S. employers; and practical tips and considerations regarding employer legal compliance, including FMLA, ADA, FLSA, OSHA, and Title VII.

Identifying the critical people and processes that have the biggest impact on a business is key to creating a response plan to minimize disruption. This webinar will give business leaders a practical playbook to help manage their business through this crisis.

Insurance

Deepening Its Roots

Timm Marini, president of Personal Lines

When FieldEddy Insurance entered the HUB International family a little over five years ago, it traded a name with a rich regional history for one backed by the resources of a large corporation. The result has been the best of both worlds — HUB’s clout improves the office’s ability to grow specific niches through talent development, while the company is still able to focus on local needs with an emphasis on building deeper relationships with customers.

The insurance company known as FieldEddy had more than 160 years of history and a still-growing geographic footprint in Western Mass. when it became part of the HUB International family in 2014.

It’s a move that simply made sense at the time, Timm Marini said, and he feels even more strongly about that five years later.

“It’s such a natural fit for us,” said Marini, president of Personal Lines at HUB International New England in East Longmeadow. “There’s a cultural mesh in that our focus and HUB’s focus has always been in delighting the customer.”

Several years ago, FieldEddy employees were tasked with coming up with tools and resources they needed to better ‘delight’ those customers, Marini recalled. “We got to about seven of them and looked at each other and said, ‘we’re going to go bankrupt trying to buy all this and do all this on our own.’ So we plugged into HUB, and that’s when we really became the market leader.”

While FieldEddy had grown dramatically through acquisition over the previous two decades, under the HUB name, the company took a more organic approach, Marini told BusinessWest, adding talent in specific growth areas, from cybersecurity to healthcare (in the wake of health-insurance reform in the Bay State, followed by the Affordable Care Act nationally).

But last year, it was back on the acquisition trail, purchasing the Insurance Center of New England in Agawam — a move, Marini said, that represented the same sort of ‘cultural mesh’ that FieldEddy and HUB did five years ago.

“They had some great talent on their team and a couple of niche markets that made sense for us,” he said. “We’re not just buying to get big. We’re buying to get better. If we can buy an organization or invest in an organization that helps us get better, that’s what HUB’s acquisition strategy country-wide is.”

“When there’s a catastropic event — a hurricane, a tornado — HUB is ready, and we’re communicating to our customers, we’re communicating to the marketplace, and we’re giving them better data than what you’d receive in the news. We’re getting ready for the event.”

The company undergoes a due-diligence process before making an offer, he explained, one that involves three questions. “Number one, is it a good fit? Number two, are they bringing something to the party to make us better? And number three, can we make it grow?

“This was a great cultural fit, with really educated people — just good, solid folks. That first piece of it was a home run,” Marini went on. “Then, they have talent that we didn’t have, and we’re getting that talent. HUB wants to bring levels of expertise and be able to delight our customers differently. We want different people on our teams, different resources available to us, that will help our customers.”

For this issue’s focus on insurance, Marini talked about how HUB continues to expand both its reach and its knowledge base in numerous ways.

Hub of Activity

HUB itself has been around only since 1998, with its first operations in Canada and Chicago. Its first acquisition after that was CJ McCarthy Insurance Agency in Wilmington, Mass. in 2000. It picked up FieldEddy 14 years later.

Today, Marini said, HUB is the largest independently owned agency in New England, the largest personal-lines agency in the country, and the fifth-largest agency in the U.S. overall. So, while the firm operates autonomously with local decision making, it does so with plenty of clout behind it.

“A lot of our talent investments, we could never do on our own,” he said, citing growth in areas like risk services and loss control, claims advocacy, and underwriters who specialize in specific niches.

Legalization of marijuana is one example. “We’ve made pretty significant investments in educating our brokers across the country and making sure we can handle the unique needs of that industry.”

As another example, “on the health side, we’re asking, ‘what do we need to do better for the customer?’ We’ve invested in health and wellness folks, people who can help mitigate exposures and help us all be healthier … we’ve invested in actuaries, underwriters, data-analytics experts, just to help carve out the information and make sure the pricing we receive from insurance carriers is the right one for our customers.”

“I believe we’ve tried to move away from just the transactional side of things. Price is important, coverage is more important, but most important is being that advocate — not just when the negative or adverse thing happens, but being there through the process, through the life of the product that you’re talking about. It’s not just the transaction.”

And in times of emergency, HUB brings more to the table than insurance, he added.

“When there’s a catastropic event — a hurricane, a tornado — HUB is ready, and we’re communicating to our customers, we’re communicating to the marketplace, and we’re giving them better data than what you’d receive in the news. We’re getting ready for the event.”

When a hurricane devastated Bermuda last year, he noted, “we had $10 million homeowner customers on the island. And when that happened, we had barges filled with emergency-care stuff out there. HUB coordinated it — paid for by us, by our carrier partners — and it had nothing to do with insurance, just to do with taking care of people.

“Again, as a small independent, we didn’t have the resources to do that,” he went on. “That’s really cool. To be able to communicate that and see it in action, it puts me to bed thinking we made the right decision five years ago.”

In general, Marini said, being part of a large national company is a healthy balance between local autonomy and broader resources.

“The budget is more regional and filters across, but my team is plugged into the process. We have growth initiatives and retention initiatives — again, focused on delighting the customer,” he told BusinessWest. “We say, ‘grow well, grow big, but don’t just be big — be great at what you do.’ And the greatness comes from our customer feedback.”

Knowledge Is Power

HUB International New England has also bolstered its educational outreach in recent years. For example, it recently sponsored a seminar with about 350 business customers about the new employee leave laws in Massachusetts, featuring Bill Alpine, director of the Commonwealth’s Department of Family and Medical Leave, and two attorneys.

“That whole educational process takes a real investment in your people, in your talent. And that’s one of the benefits of HUB,” he said, adding that the company offers a ‘HUB University’ program in Chicago, where employees are trained in specific industries and niches to be better able to serve certain types of customers.

“It could be as simple as one individual or one family that owns one home, or a high-net-worth individual with millions of dollars of assets, all the way to the largest corporations in the world,” he said. “We educate each one of those folks and determine their needs through an assessment, a conversation. It’s not just selling them a product, it’s really finding a solution — and having them understand up front what they’re buying.”

All insurance, after all, is assessing risk and deciding how to mitigate and cover it, he went on. Someone in a flood zone might decide, based on not having a flood in the past 100 years, that they’re OK with not covering that, but at least they’ve had the conversation.

“It’s an educated buying decision based on some expertise we bring to the table. It’s not just trying to sell a policy,” Marini said. “And how do you get there? We have to educate our employees, and they educate our customers. It’s a shared conversation, not a unilateral conversation.”

HUB takes part in national summits with industry experts as well, talking about hot trends and digging into coverage details, such as how to protect, say, someone’s vast wine collection from California wildfires. That’s a first-world problem to be sure, he noted, but if it’s something of value to the customer, then it’s important to HUB.

“Each person has specific things that are special to them,” he told BusinessWest. “Our responsibility is to find the right levels of protection for them.”

That involves forging relationships, he added.

“I think about some of the partnerships I have personally. The same guy has made my suits for 28 years. The same guy cut my hair for 34 years. Those are personal relationships — yes, they provide a service, and insurance is a service — but they’re real, personal relationships that bring different conversations than you have with your friends and your other acquaintances.

“I believe we’ve tried to move away from just the transactional side of things,” he continued. “Price is important, coverage is more important, but most important is being that advocate — not just when the negative or adverse thing happens, but being there through the process, through the life of the product that you’re talking about. It’s not just the transaction.”

Community Ties

Marini says HUB International New England has long maintained relationships of another kind as well — with the nonprofits and community organizations it supports with money, time, energy, and expertise.

“I still sit on six nonprofit organizations. It’s all about giving back to the community,” he said, adding that employees are encouraged to get involved as well, even if it overlaps with work time. “We encourage that; we don’t count it against their time. It’s good for our organization. We want to be in the community, frankly. It’s what we are. And HUB is the exact same way. It’s an expected part of the culture.

“We encourage everyone in the organization to be involved. It’s rewarded, not penalized,” he went on. “After all, this is a people business. We earn a lot of money, and we invest a lot of money. That’s something I’m proud of.”

 

Joseph Bednar can be reached at [email protected]

buy ivermectin for humans buy ivermectin online buy generic cialis buy cialis payday loans online same day deposit 1 hour payday loans no credit check