On November 7, 2024, MarshBerry held its 19th annual Impact Summit, the insurance brokerage industry’s leading capital raising event discussing trends in the debt and equity markets. The event featured a state-of-the-industry overview from John Wepler, MarshBerry Chairman and CEO, and two separate panel discussions moderated by Phil Trem, MarshBerry President, Financial Advisory, and Gerard Vecchio, MarshBerry Managing Director. It also featured a keynote presentation from Geoff Colvin, Senior Editor-at-Large, Fortune, and bestselling author.
It was perhaps not entirely coincidental, but certainly appropriate, that the Summit took place one day after the U.S. Presidential election in which former President Donald Trump was elected to take over the White House in 2025 for his second term. This timing gave speakers and attendees plenty to discuss about the future outlook for the capital markets and the insurance brokerage industry at a transitional time in the U.S. and the world.
Here were some highlights from this year’s Impact Summit:
Utopia or Industry Supercycle?
MarshBerry’s Chairman and CEO John Wepler kicked off the event by asking attendees, “Do you know how lucky you are?” He pointed out that those operating within the insurance industry over the past 15 years have experienced an unprecedented period of incredible growth, not just in terms of GDP expansion, but compared to other industries. The current environment has generated an exposure base explosion, a property and casualty hard market for both admitted lines and Excess & Surplus (E&S) lines, and unprecedented capital market support.
Unless the industry is living in its own utopian universe, Mr. Wepler argues that this current supercycle (defined as a prolonged economic expansion) can end. In fact, there already may be signs that the supercycle is under pressure. Rising interest rates over the past few years have put pressure on investor returns. Average firms are delivering double-digit organic growth without even trying. But much of that growth is coming from external factors. So, the question for any firm looking to capitalize their growth or look for a partner is: How are you differentiating yourself? Simply getting a check mark for “growing” is no longer good enough. Now, buyers and investors want to know “how are you growing?”
Mr. Wepler’s final thoughts were on the future outlook for insurance brokerage and the capital markets, considering the fresh news of President-elect Trump’s pending leadership in 2025. He stated that this leadership change most likely means no significant tax increases (including on capital gains), a more stabilized regulatory environment, and the potential for continued positive stock market performance. “If you sold your insurance brokerage today and were sitting on a big pile of money,” stated Mr. Wepler, “your financial advisor would still most likely suggest that you invest in a mixture of equity, fixed income, alternative investments — and likely a private equity fund that invests in insurance.”
The Current and Future Environment for Debt and Equity Lending
Gerard Vecchio, MarshBerry’s Managing Director, moderated a panel of experienced lenders who discussed the current and future environment for raising debt for insurance brokers. Panelists included:
- Paul Thivierge, Director, Commercial Banking – Insurance, BMO Harris Bank
- Rick Dennen, Chief Executive Officer, Oak Street Funding
- Jim Roche, Chief Credit Officer, Willow Tree Credit Partners
The panel spoke on the challenges of the past few years within an inflationary environment, leading to higher interest rates and the impact on lending to the insurance industry. All panelists expressed that the challenging economic environment just made the insurance brokerage industry even more attractive – given its resiliency in tougher economic conditions, continued high recurring revenues, controllable costs and consistent free cash flow. Even with the potential for flattening insurance rates, now that inflation has stabilized, there is “still plenty of margin in this business,” stated Rick Dennen of Oak Street Funding. Jim Roche of Willow Tree agreed, “We leaned into the insurance industry years ago and haven’t regretted it.” Paul Thivierge of BMO stated, “We continue to be very bullish in this very consistent industry.”
Mr. Vecchio asked the panel: “What are your expectations for lending to insurance brokerages in 2025 given the results of the presidential election? Will funds be more or less available? Will pricing remain flat or change materially? Will spreads narrow or widen for attractive borrowers?”
Overall, the panel did not see significant changes in lending practices as a result of the election, with Mr. Roche stating, “Keep in mind, this administration has been in office before, so we have a good idea of what to expect.”
Mr. Dennen added, “We see M&A activity increasing between 10-20% next year.” The discussion that ensued revolved around the idea that an active M&A marketplace actually reduces the risk of default for lenders to insurance brokers as third-party independent equity capital advisors are reassessing the growth characteristics of specific companies periodically. These third-party equity providers would not be continuing to invest in the industry in such large amounts if the risk profile has become materially worse.
Overall, the panelists believe the space will continue to benefit from its demonstrated resilience to market volatility, and the sector will continue to command modestly tighter spreads than many other sectors within leverage finance. Directional movements will have more to do with trends in the economy and whether there is elevated volatility in the credit markets overall.
The Pros and Cons of Public vs. Private Capital Structures
Phil Trem, MarshBerry’s President, Financial Advisory, moderated a panel with industry leaders, Tim Turner and John Mina, to discuss some of the benefits and challenges of being a publicly owned vs. private equity backed broker.
Tim Turner, Chairman and CEO of public broker Ryan Specialty Group (RSG), provided some perspectives from a company that went from privately-owned to publicly traded. When asked about the operational differences between private and public, Mr. Turner said, “For us, there’s not much difference. While our goal was never to be public, we always ran the company as if it was publicly traded – meaning from a regulatory and compliance standpoint. When the time came to become a public company, we were ready, which made the transition easier. One difference now, as a public company, is the need to prepare even more diligently and provide quarterly earnings for public communications, for investors and analysts.” He added, “One other big difference, however, is that the ability to accelerate M&A deals is much quicker.”
John Mina, CEO of PE-backed Accession Risk Management Group, the parent company of Risk Strategies and One80 Intermediaries, talked about the unlimited amount of capital that is available to a privately held company for acquisitions. “It basically means there is almost nothing we can’t pursue,” he stated. “But that flexibility creates the need for discipline. We may need to walk away from a deal if the ask is outside what we believe will help us achieve our goals.” When asked about how a privately capitalized broker’s strategy might be different from a public broker, Mr. Mina stated: “Since we don’t report to the public, some of our strategies may have more of a long-term outlook. Sometimes investments don’t always work out, but those are baked into the long-term plan.”
Mr. Trem asked both leaders about their thoughts on the future of public brokers.
Mr. Turner stated, “So many private brokers are getting so big, their options are limited. They’ll get to a point where no one will be able to take them on, so they may not have much choice but to go public.”
Mr. Mina agreed, stating, “As a privately-owned broker, sometimes it’s hard to find just one backer to write a check. You will need several in order to finance your goals. I agree that their options will be limited, and going public may be their future.”
Keynote Address: How Will President-elect Trump’s Policies Impact Business?
The Summit’s keynote address and final speaker of the day was Geoff Colvin, Senior Editor-at-Large at Fortune magazine. Mr. Colvin had the challenge of delivering next-day insights into the results of the U.S. presidential election and potential impact of President-elect Trump’s proposed policies on topics ranging from the economy to taxes to tariffs.
Mr. Colvin started his presentation by providing an optimistic outlook on the economy, stating: “These are the facts, no matter who you voted for: The U.S. economy is already strong. The stock market is at all-time highs. U.S. productivity leads the world. And the value of U.S. companies has more market cap than all other countries combined.”
Mr. Colvin dove into other Trump polices about which business owners might be concerned. Most notably, the Tax Cuts and Jobs Act (TCJA) of 2017, which is set to expire at the end of 2025, will most likely be the top focus for Trump in 2025. Much of the TCJA will require congressional support, which may be possible now that the Senate (and potentially the House) have Republican control.
Businesses will also most likely see an easing of regulatory policies, many set by the Biden Administration. However, one issue on which Republicans and Democrats agree is that regulation on big tech is important and may not be reversed under the Trump administration.
Lastly, Mr. Colvin provided a perspective on Trump’s suggested 60% tariff on all imports from China, and perhaps a 10-20% tariffs on everyone else. U.S. policies have (over the last 70 years) strived to reduce tariffs on imports, in an effort to improve economic trade both ways. In 2017, Trump imposed significant tariffs in his first term, which Biden left in place. But the suggested new tariffs would be an extreme reversal of the historic trend toward reducing tariffs. “The President of the U.S. has fairly unlimited power to make these changes,” noted Mr. Colvin. However, Mr. Colvin also pointed out that Trump has often taken extreme positions for the purpose of keeping other nations guessing as to what he may actually do.
MarshBerry Impact Summit
MarshBerry Impact Summit is designed for a diverse audience of business leaders of Insurance distributors, providing a valuable platform for professional investors from private equity firms, family offices, pension funds, lenders, sovereign wealth funds, and banks.
If you attended this year’s Impact Summit and wish to discuss any of the topics or strategies for how to leverage debt to unlock your firm’s growth potential, please email or call Phil Trem, President, Financial Advisory, at 440.392.6547, or Gerard Vecchio, Managing Director, Specialty Practice Co-Head, at 212.972.4886.
If you missed this year’s event and would like to learn more or be added to our registration reminder list, please visit this page.
