Confie Seguros’ president wants it known that the agency made good on its promise a year-and-a-half ago to up its buying spree and expand into standard personal and small commercial lines, all while broadening its demographic from being primarily a Hispanic focused firm.
It may be that he’s strutting, but he also likes to broadcast his agency’s buying spree because it helps bring potential acquisitions his way – on a weekly, if not daily basis, he says.
The promise was made by Confie President Mordy Rothberg after the Buena Park, Calif.-based insurance agency was purchased by ABRY Partners near the end of 2012.
The Boston-based private equity firm acquired a majority of the equity in Confie from San Francisco, Calif.-based Genstar Capital. ABRY focuses on business and information services, media, and communications investments. Since 1989, ABRY has completed more than $36 billion of leveraged transactions and other private equity and mezzanine investments, representing investments in roughly 450 properties.
The promise of great growth from the president wasn’t too long of a bet when he made it. Growth is all Confie Seguros has known since its inception in 2008, building up to today what can be considered a massive portfolio.
Since its acquisition by ABRY the firm has grown from $200 million in revenues and 300 offices to $300 million revenue and 540 locations. The firm is now in 17 states.
“We’re approaching $100 million in premium in the standard lines,” Rothberg said. “We’ve seen exponential growth in our business. Our pipeline to date has never been stronger.”
Confie has more than $830 million in premiums, with the overwhelming majority in personal lines.
In March Confie announced a deal to buy Ida Tunnell Insurance in Marble Falls, Texas, near Austin. That gives Confie 120 total offices in the state.
Confie isn’t alone. A handful of large firms have been on a buying spree for the past two years.
Marsh & McLennan Agency LLC in the last few months has purchased several firms, including San Diego, Calif.-based Barney & Barney LLC, adding $100 million in revenue and 500 employees to its ranks. USI Insurance Services earlier this year agreed to purchase 42 of Wells Fargo’s insurance brokerage and consulting offices.
A report issued earlier this year by Frost & Sullivan showed the sized of M&A deals in the property/casualty industry began growing last year. The report states that M&A activity declined in deal volume but there was an increase in average deal value in 2013.
Rothberg of course likes to credit his management team for the rapid growth, but he said the positive feedback that the principals in their acquisitions are willing to offer for Confie is the driving force behind Confie’s agency buying momentum.
“We’ve done 60 acquisitions and we have 60 references,” Rothberg said.
A reason for that, Rothberg said, is that the firm doesn’t take the same approach to acquiring other firms each time.
“We don’t have a cookie-cutter approach to our acquisitions,” Rothberg said, adding that the way in which deals are structured depends on the needs of the seller.
Having lots of cold, hard mullah to plunk down upon purchase also helps.
“We are a cash buyer,” Rothberg said.
Yet another trend Confie has in its favor is that there are few competitors in the market for small personal lines agencies. That leaves few options for sellers who want to get rid of their business or cash out.
“It’s up to the entrepreneur to sell to us or to hold their business,” Rothberg said.
Confie has also pushed into standard lines and small commercial.
“We’ve really grown on that side of the business,” he said.
Confie has expanded into not just nonstandard but standard preferred small commercial agencies.
“We think that’s going to be a growth area for us,” he said.
Look for such acquisitions for the rest of 2014, according to Rothberg.
“I’m more optimistic today than I was last year at this time,” Rothberg said. “More agencies are approaching us about partnership opportunities. We will be acquiring more than over $50 million in revenues for 2014.”
According to Rothberg, he’s being approached weekly or sometimes daily by agency owners.
Rothberg wouldn’t say how much Confie pays for agencies on average, but said the firm does pay a competitive price, and he wouldn’t deny Confie has overpaid on occasion.
“Obviously, the amount of deals that we’ve done, we don’t take every nickel off the table,” he said.