Mercator Risk Services, a specialty wholesale insurance broker, acquired Tennant Risk Services Insurance Agency LLC, a Hartford, Conn.-based wholesale broker and underwriting manager. Terms of the transaction were not disclosed.
Tennant Risk Services specializes in errors and omissions, directors and officers liability, employment practices liability, architects and engineers, medical malpractice and cyber liability among other things. “Bringing the Tennant and Mercator teams together is win-win in our eyes,” said Mercator’s CEO Chris Treanor, adding that Tennant offers products and services that will complement Mercator’s current operations.
“We weren’t that strong in providing small commercial or professional liability solutions to our customers but a lot of them needed it,” Treanor said. Tennant Risk Service is very good at handling smaller transactions which is something Mercator hasn’t been good at, Treanor said. “We now can bring those competencies to our customer base.”
Tennant’s President Bob Sargent said both firm’s business models were very compatible. “The culture aspect was very important to us,” Sargent said. “We are excited about joining Mercator as it will enable us to grow our business strategically though its national platform, innovative marketing capabilities and broad market access.”
The combined firm will write slightly more than $110 million in premium with just under 70 people, Treanor said. Sargent will serve as an executive vice president and will head up the Hartford, Conn., office.
Treanor said he doesn’t anticipate there will be significant cost take-out as a result of the merger. “We want to make sure we have some capacity to grow,” he said. “We don’t see a whole lot of consolidation.”
Perfect time to grow
Given the soft market environment and the pressure for insurers to increase market share and cut rates, now is an opportune time to grow, Treanor said.
“It’s a perfect time to grow,” Treanor said.
“As the broader market softens, and the retailers have a tougher and tougher time they will look to do more with less,” Treanor said. “We think it’s a great time to be in the business to provide outsourced expertise to brokers. If we can do it more efficiently they (brokers) will make the smart decision to do it with us.”
While other firms may be motivated to acquire by market cycles, Sargent said current insurance market or economy had nothing to do with the Mercator-Tennant acquisition.
“Our conclusion was we have an opportunity to build business together, technical expertise and great markets,” Sargent told Insurance Journal.
Treanor said more acquisitions could be in store in the future, but Mercator will not get into the business of acquiring just for the sake of growth.
“We are interested in aligning with people who bring in technical expertise or strength in a particular geography,” Treanor said. “Our (financial) backers, Stonepoint, have told us to keep an eye out for good firms, but we don’t want to do it (acquire) just to do it. We want it to make strategic strength.”
Mercator grew business by 50 percent in 2007 and Tennant Risk Services has grown in excess of 20 percent year-over-year, Treanor noted.
Tennant Risk Services will be branded under the Mercator name as Mercator Pro for professional liability and management liability, while small business risks will be under the name, Mercator Commercial Services.
“Under Bob’s leadership, Mercator will build out a small business commercial platform to efficiently provide solutions to smaller risk issues, which Mercator will extend to its clients countrywide,” Treanor said.
“Collectively, our clients will benefit as we provide a wider range of solutions when confronted with tough-to-place accounts or complex issues,” Sargent said. “Our commitment to expertise and service is consistent with Mercator’s approach and will allow our client’s to win accounts.”
Source: Mercator Risk Services Inc., www.mercatorrisk.com