Wanted: Florida Agencies Focusing on Hispanic Market

Sunshine State High on List of States for Agency Acquisitions by Consolidators Behind Confie Seguros

The movers behind the insurance agency consolidation firm Confie Seguros say they are well-positioned to meet their goal of a $300 million revenue company focused on the Hispanic insurance market within a few years, despite current financial markets.

Also, while they have already closed on three agency acquisitions in California and Texas — bringing total revenues for Confie Seguros to $75 million and premium volume to $250 million — they are very interested in finding agency partners in Florida and in the Southeast region as they grow the company.

According to John Addeo, chief executive officer, and Mordy Rothberg, president, their $300 million in funding is all lined up. The money for future acquisitions is being provided by private equity firm Genstar Capital, and the company management team, for $75 million, as well as a bank facility with expected capacity in excess of $200 million.

The current credit market freeze is not dampening their enthusiasm or their ability to proceed.

“Thankfully, it doesn’t have an effect. We’re well-financed and big believers in this marketplace,” said Rothberg.

The current financial turmoil could turn out to be an advantage for them.

“In a lot of ways it’s making us look at things differently in the sense that there’s not too many other people out there who are actually capable of making acquisitions at this time,” Rothberg said.

Confie Seguros hopes to build a national distribution company focusing on eight to 10 of the most densely populated Hispanic markets, including California, Arizona, Florida, Texas, Illinois and Nevada.

As they go searching for agencies, Addeo and Rothberg say Florida is at the top of their list.

“We are talking to a number of companies in Florida and obviously Florida is probably the third largest state in the country from an Hispanic population standpoint. So, we would love to get in there and get rolling,” Addeo told Insurance Journal.

Addeo says they are willing to go wherever they can find agents who believe in their business model. “Whether it’s Texas or Arizona or Florida or Las Vegas, you know we don’t say because we are in California, we are going to Texas next. We take them as they come.”

Roll-Up Record

Addeo has an impressive track record in rolling-up agency businesses. He has led two consolidations of middle-market property and casualty brokerages. Most recently, he was president and CEO of Alliant Resources Group, a company he founded with revenues exceeding $200 million through 12 acquisitions. Prior to that, he was president and chief operating office of USI Insurance Services, where he acquired 90 insurance brokerages and built USI into the sixth largest brokerage firm in the U.S.

Rothberg, founder and president of Confie Seguros, has business development experience from his tenure as an executive at IDT Corp and Net2phone. He is heading up the business development and strategy for Confie Seguros.

Confie Seguros is looking to acquire independent insurance agencies that are focused on Hispanic customers. Typically these agencies’ main product is non-standard auto—as much as 90 percent of their revenues can be from this line, according to Rothberg.

The Confie Seguros business model calls for growing the acquired agencies by expanding their product mix to include life products, homeowners and certain benefit products.

“The fact that these agencies we’re looking at aren’t offering any products other than non-standard auto— that gives us a tremendous ability to grow our business and there is limited competition with respect to acquisitions with these agencies,” Addeo maintains.

He cites statistics showing that anywhere between 50 and 75 percent of the Hispanic community have never been approached by a life agent.

He thinks Hispanic customers will appreciate agents who offer them more products.

“Our customer comes into our store to buy insurance. Our customer doesn’t buy insurance over the phone; our customer doesn’t buy insurance on the Internet. What our customer wants is face-to-face contact when they buy insurance products. So, we literally have our customer coming in the store. So, it doesn’t cost us any more to say to them: ‘hey have you considered purchasing life insurance to protect your family?'”

There is another reason Addeo is optimistic about his business model. When he was building Alliant and USI in the middle market commercial lines space, he would bump into 20 or 30 other companies looking at the same potential acquisition. But Confie Seguros is not running into that kind of competition for agencies.

Structuring a Deal

When he does find an agency he is interested in, Addeo says he structures the deal to meet the individual owner’s circumstances.

“I think we have an aggressive acquisition program. I think we pay a fair price and we can accommodate sellers that either want to stay in the business or that want to get out of the business. I think if you look at my track record, I’ve always dealt fairly with my partners and I think we have a sound business program, that for those that want to stay, I think there will be a lot of rewards down the road for them,” Addeo said.

The owners of the first company that Confie Seguros acquired in California chose to take some money from the deal but also stayed around to grow the business using Confie Seguros resources. In the second deal, the seller wanted to get out of the business.

“So, we really have to sit down with each potential selling candidate and understand what they want to do in the future,” adds Addeo.

Executive Team

In addition to Addeo and Rothberg, the executive team includes Stephen Provenzano and Andre Urena. Provenzano is executive vice president and CFO. Provenzano has more than 25 years of finance and operations experience in multi-unit retail businesses. Urena is senior vice president of business development. Urena has more than 20 years of insurance industry experience in the Hispanic insurance market and is the CEO and founder of the Latin American Agents Association.

Addeo’s experience with other consolidations confirms his enthusiasm for his latest venture. “I think the potential here is as good if not greater,” he says of Confie Seguros.

Hispanic Agency ‘Must Haves’

Of course, an agency does not have to be owned by an Hispanic to market to the Hispanic community but Confie Seguros CEO Addeo says there are attributes an agency must have for him to be interested in buying it. The agency must have storefronts where Hispanic customers can come in and it must have agents who are bilingual. “And you have to give them [Hispanic customers] good service,” Addeo adds.

Topics California Florida Texas Agencies Market