AmWINS CEO DeCarlo on Colemont Merger and Going Global

The acquisition of wholesale insurance broker Colemont Insurance Brokers by its competitor AmWINS Group gives AmWINS entry into international markets for the first time and a bigger presence in Texas, where Colemont is based.

The deal, for which no outside capital was needed, also enhances some of the product teams at AmWINS, including those for property, financial services and trucking markets, Steve DeCarlo, CEO of AmWINS, told Insurance Journal in an interview.

According to DeCarlo, no layoffs among field forces are planned although offices in a few cities where both brokers have a presence will be consolidated.

The combined firm boasts about $3.6 billion in annual property/casualty premium and about 1,800 employees worldwide, making it the largest specialty insurance distributor in property/casualty, according to rankings by Business Insurance based on 2008 totals. In overall wholesaler rankings, its combined property/casualty and benefits premium of $4.8 billion places it second to Crump Group, which Business Insurance ranks number one overall with $5.3 billion in combined property/ casualty, life and benefits premium.

AmWINS now has access to more than 1,000 specialty lines markets and programs, as well as in-house underwriting facilities and a fast-growing group benefits segment that DeCarlo thinks is under-appreciated. Indeed, DeCarlo seems as proud of his company’s expansion into the benefits business as he is of the Colemont coup.

For DeCarlo, Colemont’s Texas team and its international business are the keys to the blockbuster deal.

“Geographically, it’s a real advantage for us to pick up the Texas team. The Texas organization is well north of, or approximately, $25 million in revenue. So that was big part of this transaction, to be able to partner with this brokerage team in Texas,” DeCarlo said.

To its existing excess and surplus lines brokerage, life and health benefits brokerage and property/casualty program underwriting, AmWINS now adds a global reinsurance component from Colemont’s operations. About 40 percent of Colemont’s business is international.

DeCarlo said he has been looking to go global for several years sand saw Colemont, which brings a London broker and business in 16 countries, as the “right partner” with which to finally do it.

“We picked up 16 countries. So that was a big, exciting part of the transaction, too, to kind of push our footprint out of the 50 states,” he said.

According to DeCarlo, the international capability sets AmWINS apart from its competitors.

“I don’t know that a lot of wholesalers are thinking internationally. Obviously, Colemont did. When we looked at it, we had three legs to our company. We were a broker. We were the underwriting business. And we were in the benefits space. By partnering with Colemont, we picked up a fourth segment, that being the international component, which will make up about 11 percent of our revenue.

“We think that’s about the right mix to have, 11 percent of our revenue internationally, as we don’t want it, obviously, to become overweighed. But not many wholesalers are expanding on the international platform.”

DeCarlo sees the deal strengthening AmWINS in other areas as well: property, financial products and trucking in particular.

“We’ll have the best property wholesale team in the industry,” he said. He also thinks AmWINS emerges with the largest finpro (financial products) team and picks up additional trucking capabilities in the U.S.

The combined firm is being led by DeCarlo as CEO; Skip Cooper, president; James Drinkwater, president, U.S. Brokerage Division; Sam Fleet, president, Group Benefits Division; Michael Lapeyrouse, Underwriting Division leader and president, The American Equity Underwriters Inc.; and Surinder Beerh, CEO, Colemont Global Group, the international unit.

The terms of the deal remain confidential. However, privately-held, Charlotte, N.C- based AmWINS was able to handle the terms in-house, according to Scott Purviance, CFO. “It didn’t really require us to raise any new capital,” Purviance said.

“We didn’t need to go outside our four walls to raise more money,” DeCarlo confirmed.

Also, private equity firm Parthenon Capital, which owns a majority of AmWINS and is on its board, assisted with due diligence but was not asked to put up any money, according to the AmWINS executives.

All employees, including some coming over from Colemont, will own 40 percent of the company.

The AmWINS chief said that while there is overlap among the carriers used, there is not a lot of redundancy when it comes to the sales force. “A good salesman has relationships and he or she sells. We want them on our team,” DeCarlo said.

DeCarlo said AmWINS got involved last year when Colemont was looking around to raise capital and then talks got serious between the two last October. Retail agent customers of the two brokerages should not see a lot of change due to the merger, according to DeCarlo. “I think relationships that have been formed — because it is a people business — will continue to operate to where they have been,” he said.

“Obviously, we will not be competing internally against each other. So if a retailer might have been using two wholesalers against each other, they may have to pick another firm, but I don’t see a real impact on the retailers other than the opportunity for us to use our relationships on a deeper level with markets to solve their client’s problems.”

Topics Mergers & Acquisitions Texas Agencies Property Property Casualty Casualty