Swett & Crawford, one of the nation’s largest and oldest wholesale insurance brokerage firms, and London-based independent wholesale, reinsurance and specialist broker Cooper Gay, completed negotiations to form a combined entity under a new unified holding company on July 9, 2010.
Despite the revised ownership structure, Neal Abernathy, CEO of Swett & Crawford, and Steve Sadler, chief operating officer of Swett & Crawford, say the deal doesn’t mean a great deal of change for retail agents doing business with the firm today. But in the longer-term, the combination will deliver more resources to Swett & Crawford’s agent base on a global basis.
“Right now, most everybody who does wholesale insurance brokering – if not everybody who does wholesale insurance brokering – just does it in the U.S., and they really don’t have the network around the globe to handle international, or handle accounts with international exposures,” Abernathy said in a podcast interview with Insurance Journal. “We will be in a better position to handle those accounts for our retailers after this transaction.”
“[A]s we go forward, it’s business as usual in terms of footprint that we have in the U.S., but our resource base and our capabilities will increase dramatically,” Sadler added.
Global capabilities has become more important because a large number of insureds today have global exposures. “There are a number of our agents who are fairly limited in their capabilities on the global basis because they’re a regional firm or a local firm from a retail perspective,” Abernathy said. “Going forward, we will have the wherewithal to work with them to help in the placement on those foreign exposures for those domestic insureds.”
The combination of firms seems to be a perfect fit. While Cooper Gay had a wholesale operation in the United States prior to the combination, its U.S. presence was not significant, Abernathy said. “And we [Swett] didn’t have anything in the rest of the world,” he said.
Aon sold Swett & Crawford to a group of private equity investors in 2005, and Abernathy says those investors will continue to play a role even after the new ownership structure takes place. But like any private equity investor, the financiers will be looking to move out when the value is right, he said.
“They’ve been in the investment for almost five years now. They’re patient. They want to maximize the value. They’re not anxious, I don’t think, to get out. But at some point they will,” Abernathy said.
Why now? Abernathy says the decision to find a global partner has been in the works for some time. “This is something that I’ve been looking for us to do for the last five years.” But the decision to go global with Cooper Gay came now because the network is in place where the move made sense from a global perspective, Abernathy said.
The move also positions both firms for future growth, Sadler added.
“If you’re going to take advantage of some future market changes, when and if they happen, this is a great combination for that positioning for the future,” Sadler said.
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