Venture Capital Firm Buys California Wholesaler Yates, Rolls Out Growth Plan

Scottish American Capital, a venture capital group with a cache of high net worth individuals, has purchased 80 percent of Tustin, Calif.-based Yates & Associates and given founder Jim Yates a three-year contract as chairman.

The company said it now plans to add at 10 underwriters within the year under a longer-term national expansion plan.

Yates, which focuses on excess and surplus lines, started in 1987. Scottish American has for some time sought to purchase a managing general agent, and to build it out nationwide, said the 77-year-old Yates, who added that he was motivated to sell because he wanted to relax and he liked ‘the idea that they wanted to maintain Yates and Associates.’

Yates said he also sold because ‘the price was right.’ He declined to name the purchase price or offer further details on the deal.

Yates, who retains 20 percent ownership of the company, said: ‘They approached me, I guess it’s been eight or nine months ago. And then it all came to fruition.’

Orange County, Calif.-based Scottish American invests in and actively manages privately held insurance distribution businesses in the U.S.

Paul Thomson, an Orange County resident and principal of Scottish American, becomes the president of Yates. Thompson, who also declined discuss financial details of the deal, said that both Yates the company and Yates the man give Scottish American a strategic advantage in the form of experience and existing relationships.

‘I spoke with over 100 MGAs prior to Yates,’ Thompson said.

The plan going forward is to build out the company, he added.

‘We’re hiring very aggressively,’ Thompson said, adding that they have already hired three new brokers, and plans call for hiring 10 underwriters this year and six assistant underwriters are starting on their professional training.

‘There’s a real opportunity for people to come here and grow a business,’ he said. ‘We’re investing a lot of money in the business itself.’

Prior to founding Scottish American, Thompson was head of finance and strategy at Web firm Box UK. Thompson worked for the Royal Bank of Scotland, and he handled the bank’s business with Lloyd’s of London. He got much of his basic training in the insurance industry while with Pricewaterhouse Coopers as an accountant auditing insurance companies.

Thompson, who is Scottish American, said he left the U.K. a few years ago to start his own insurance company.

Other members of Scottish American include: Steve Hollis, European head of markets for KMPG; Paul D. Rogers, former president of CBIC World Markets Group; business book author Neil Rackham; Peter Francis, head of J. M. Huber Corp.; Ralph James, executive director of executive education at Harvard Business School; and Michael O’Connell, managing director of M2O Investments.