A Conversation with Socius Insurance

Video Transcription

George Bucur: Hello, ladies and gentlemen. My name is George Bucur. I’m a director within MarshBerry’s financial advisory practice, specializing in serving MGAs (managing general agent), MGUs (managing general underwriter), wholesale brokers and program managers. Today, we are very pleased to be here and introduce Patrick Hanley, president of Socius Insurance Services. Specifically, Socius just completed a transaction with Abry Partners and MarshBerry had the privilege to be the exclusive advisor throughout that transaction. Pat, welcome.

Patrick Hanley: Thank you, George. Pleasure to be here.

Bucur: Excellent. Pat, I thought we could share some perspective and experiences that we gained throughout the journey we took together. Specifically, when we started this journey, we focused on the concept of remaining relevant in the marketplace. We see a lot of consolidation, a lot of organic growth, and specifically, I think this sentiment, or these feelings really rung true with you and the Socius team in regards to the overall presence and that relevancy that we talked about. Can you maybe go into a little detail about what it meant to you and Socius to remain relevant and then why a private equity partner ended up being the right solution to your goal of relevancy?

Hanley: Sure, George. Our decision to move forward with our private equity partner really did center around this issue of relevance. We have worked for the last 24 years to build our organization up and we’ve been very successful at that. Having said that, the consolidation in the insurance industry, specifically on the wholesale side, has created a wide gap between the largest wholesalers and those below the three or four largest. And so, we looked around, I realized that we needed to grow inorganically, we needed to remain relevant quite honestly. Our steady growth of 8% to 15% a year of organic growth, while great, was not going to do it in terms of where we thought we needed to be in order to remain a viable alternative to our largest competitors. As a result, we hired MarshBerry, and your team has been amazing at guiding us through this process. We find ourselves now moving forward, looking to execute on our new strategy.

Bucur: Excellent, and it has been quite the journey we did take together. As you think through the objectives and the goals of who Socius is today and where you want to be in the future, and keeping in mind Socius is approximately 300 million in premium. So, we’re not talking about a small fish by any means, still large by many standards. But it’s those utmost firms that are in the billions of premium that I think really is what we’re focusing on here. How do you take who Socius is today and get to where you want to be 3, 5, 10 years down the road, what are your main objectives to accomplish that?

Hanley: Well, our main objectives or objectives is to find those organizations that are similar to ours, are like-minded if you will, and to offer those organizations that are quality shops, but haven’t maybe reached the premium buying levels that we have and offer them a viable alternative if they’re seeking a viable alternative to remaining independent and to have a viable alternative to joining the largest wholesale brokers. We really pride ourselves on having a certain culture. And I think for organizations that share our morals or our guiding principles, that we can be a very intriguing viable, again, alternative to our competitors. And so, the goal here is to not go out and try to acquire every firm out there. It’s not realistic and I wouldn’t want to, even if I could. But what we are trying to do is to find the right organizations, come together with those organizations, and together build a larger, combined, we build a larger organization.

Bucur: And I think the recurring theme that we heard throughout the process was really, yes, we want to be bigger, and we want to do what it takes to get to the next level. But we need to maintain that cultural knitting, that consistency that makes Socius who we are. And frankly, one of the things that drew MarshBerry and Socius together from the very beginning was just the impeccable reputation Socius has in the marketplace. And specifically, when you get more granular in regards to the level of customer service and how that really went through and permeated through to your employees. Can you maybe go into a little more detail about how taking on capital may allow you to better, again, service your clients as well as your employees, your stakeholders, if you will? And why that is actually, probably, thought of as a very positive throughout the process versus I think a lot of firms might have stigmas that if you take capital, it might be a negative.

Hanley: Sure, first of all, thank you for the kind words about us. We do again pride ourselves on being a coverage shop very insured focused making sure that we put together the best combination of coverage and price with always the emphasis on coverage over price and of being very collaborative and working together to put the best quality product in front of that particular insured. Another way to say it is for 20, actually pre-dating even Socius, my sort of overriding principle is to, my job as a wholesale broker is to do what’s in the insured’s best interest and also to make the retail broker look good in the process. That is, if we’ve accomplished that, then we’ve done our job. And so we have this very specific culture that is very collaborative, as I mentioned. And again, for those firms that are similar to us, I would hope and expect that that would be an appealing message to them.

Bucur: Excellent. Well, Patrick, I think this is probably part of the conversation where we’ll have to bring it to a close, but wish you and the Socius team the best of luck in the next phases of your journey. I’m sure our paths will cross again in the near future. And ladies and gentlemen, appreciate your time while we have had this exclusive interview with Pat Hanley, again, President of Socius. Thank you for your time, and we look forward to seeing you next time.