Blackstone, Goldman, Credit Suisse Back New Insurance Brokerage

July 7, 2009

A group of private equity investors, including affiliates of The Blackstone Group, Goldman Sachs and Credit Suisse, is launching a new life insurance and benefits brokerage serving the middle market and small businesses, Insphere Insurance Solutions.

This new company expects to be the nation’s largest independent career agent distribution group offering life, health, long-term care and retirement products for small businesses and the middle-income market.

Long-time New York Life executive Phillip J. Hildebrand has been named chief executive officer for the new company.

“Insphere Insurance Solutions will be exclusively focused on the under-served small business and the middle income market,” said Hildebrand. “This market has been largely ignored by major insurance carriers and agents who have migrated to serve more affluent consumers. This has resulted in a scarcity of distribution in this market.”

According to Hildebrand, the small business and middle market is the fastest growing segment in the industry. A study by the Life Insurance and Market Research Association (LIMRA) found 44 percent of the middle market believe they are underinsured on life insurance. Insuring this group would add $9.5 trillion in insurance and $17 billion in premiums, according to the report.

Even though the middle market has grown considerably over the past two decades, industry experts cite a dramatic decline in the number of carriers and insurance professionals who serve this market. The number of companies serving the middle market declined by some 37 percent over the last decade ending in 2006, and the number of overall agents declined by 16 percent.

Insphere backers see the small business market as a rapidly expanding, yet also underserved, segment. According to the U.S. Census Bureau, some 89 percent of all firms have fewer than 20 employees. A report by the national association of America’s Health Insurance Plans found that 70 percent of firms with less than 10 employees do not provide health insurance.

“We are currently in discussions with a number of leading life, health, long-term care and retirement carriers about our capabilities in reaching small business and the middle market,” said Hildebrand.

Insphere intends to enter into a marketing agreement with ING to distribute the company’s term life and universal life insurance products. The company expects to begin marketing ING insurance policies on a pilot basis in 90 days.

Insphere said it expects to build a force of 3,500 agents and offices in over 40 states by the time it begins services in 2010.

According to Hildebrand, the company plans to grow geographically and will be actively recruiting experienced and new insurance field managers and agents, with an objective to double the number of dedicated independent Insphere agents over the next few years.

“Because of our size and scale, we expect to be able to offer significant infrastructure and support for field managers and agents including lead generation, training, compliance, marketing and technology capabilities. We also believe our compensation will be unique, with an equity compensation component expected to be offered to both field managers and agents,” said Hildebrand.

Prior to being named CEO of Insphere, Hildebrand had a 30-year career with New York Life, serving in several executive management positions in 2006. Hildebrand retired from New York Life in 2007 and has since served in other advisory and executive positions in the insurance industry.

Anurag Chandra is executive vice president of Insphere. Chandra was formerly with Aquiline Capital Partners, a private equity firm where he was responsible for strategic planning and corporate development for Nationwide’s financial services subsidiaries, Nationwide Financial Services and Gartmore Global Investments.

Jack V. Heller is senior vice president. Heller began his insurance career in 1991 as a contracted sales representative. Before joining Insphere, he held the position of president and regional sales leader, and in his 18 years of sales and leadership experience, he has achieved a total team production in excess of $500 million.

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