An Exclusive Conversation with Specialty Program Group

Video Transcription

George Bucur: Hello ladies and gentlemen, my name is George Bucur. I’m a director within MarshBerry’s financial advisory practice. Serving specialty distributors such as MGA’s (managing general agent), MGU’s (managing general underwriter), program managers and wholesale brokers, we are very pleased to bring you Chris Treanor, President, and CEO of Specialty Program Group (SPG) and affiliate of Hub International. SPG has had a very aggressive start over the last six years in going from zero in premium to about 1.5 billion, that is with a “B.” Chris thank you very much for joining us today.

Chris Treanor: Hey thanks George, good to see you.

Bucur: Likewise, likewise. Chris, often time in the marketplace we’re talking with independent MGA’s, program managers, wholesale brokers, etc., and they ask us the question about how can they maximize their value. Now SPG has grown very significantly, both from an organic as well as inorganic means. When you’re looking at partners that are evaluating the marketplace can you give a little color into those attributes that drive value?

Treanor: Yeah, sure George. It’s a great question. Look we look at probably 70 to 80 opportunities a year. Kind of meeting with organizations, big and small, and when we really kind of distill it down and we’ll make you know a half a dozen, or a few more offers and close on three or four deals a year. It really gets down to a few things. There’s things that we can bring to the table that where we can provide investment capital and technology and resource and expertise, but when it gets down to it there’s certain fundamental things that they have to bring to the party and that only they can do and it really it boils down a few things. First and foremost, we look for a strong and engaged leadership team. That’s critical, you know, we want to partner with firms with kind of really talented individuals who have done a great job building a firm and want to take to the next level. We’re not looking for a turnaround. We’re not looking for a business where someone’s looking to hand the keys in. So, finding those businesses that have a track record of success, really driven around the leadership team, is fundamental. And then kind of secondary to that is strong culture. You know, you really want to be partnering with a firm that sees the world the way you do and has a partnership mindset and a cultural kind of mindset that is consistent with our view of the world and would be consistent with our trading partners, both on the carrier side and the retail broker side. So, you know to us leadership, culture, and then I think the third real fundamental piece is expertise. You know you want to partner with firms who have a durable competitive advantage in their space because they are either going to be experts in the in the wholesale products that they’re distributing or experts in the products they’re underwriting. To me, those are the secret sauces that we can’t give a firm, that a firm has to bring to the party. All the other stuff –the investment capital, the technology, the resource, the human capital– all that other stuff we can bring, but those fundamental building blocks are what makes a firm great and is what we look for. And as independent operating firms, those are the things that they should be looking to invest in to make them better either as an independent organization or as part of a larger organization.

Bucur: Excellent. So, if I were to summarize that very briefly, you look for an organization that is able to stand alone, generate growth, and has strong growth opportunities in the future, I mean simply said. And then the other part of it I think would go over more towards the cultural side and making sure you have that continuity between what you value in a partner and how that firm operates and making sure there’s similarities on that front. Is that fair to say?

Treanor: No that’s a great way of summarizing. Look, I think in a sentence we’re looking for kind of best-in-class firms who are leaders in their space, right? That’s when you distill it down. You know we want the best firm in any given kind of area, and we want to help them continue to do what they do and then enhance it and scale it.

Bucur: Great. Well said. One thing that you discussed when you’re kind of going through your summary of what drives value from your perspective is you mentioned that SPG specifically can bring resources to the table, and you know we’ve seen a fundamental shift in sellers in the marketplace. Before it was the concept of maybe, selling out, and I think the fundamental shift is now that firms want a partner. They want to find somebody that can bring those resources to allow that seller to get to the next level. Can you touch maybe for a couple of instances of examples of those resources that SPG brings to the table?

Treanor: Yeah 100%. Look, I think it’s really the industry is changing so quickly that what allowed independent firms to be successful five years ago, which could largely be driven by relationships and some expertise, is a piece of the puzzle –good customer service piece of the puzzle– but those are all table stakes these days now. You have to be able to invest in can a multi-channel media, invest in technology, invest in other resources like human resources and compliance, and it’s very hard to do that as an independent firm. So, the way we think about it is, let’s partner with firms and allow them to keep doing what they do well, but let’s help them with all the things that as an independent firm they will find it very difficult to have the time, expertise, and capital to execute on effectively. You think about kind of technology just as one example. You know in the old days and up till recently you know good customer service could be done through just, you know, returning phone calls and processing paper opportunities efficiently. But with technology, instant quote turnaround is going to become table stake. But that’s going to be expensive, so more and more in segments of our business, technology and the ability to continue to invest in technology, is going to be not a differentiator, but the price of admission. And as a small firm, your ability to kind of not just pay the price for that technology, but also stay current with what’s the newest technology and continue to enhance your platform, that’s going to become more and more challenging for independent firms. On the flip side, when you think about marketing in the old days, if you sent out an email blast you felt you were kind of ahead of the curve. But now it’s this kind of omni-channel, social media, SEO (search engine optimization), SEM (search engine marketing) — you’ve got to be reaching out to your prospects and customers in so many different ways and it’s not just time consuming and expensive, it’s complicated and you need to be on the front edge of all that. And as a small firm it’s super difficult to stay kind of knowledgeable on where the puck is going, both in terms of technology and digital marketing, just to take kind of two specific examples.

Bucur: And those are great examples, thank you for that perspective and insight, Chris. You know it’s been very impressive to watch the SPG organization grow and develop and become a very meaningful player in the marketplace. Your insights and perspectives are hugely appreciated and I’m sure our viewers are also appreciative of how they can take what they’re hearing, apply that to their organization to maximize value. Because whether you’re selling or staying independent as a firm, to be relevant in the marketplace, they’re going to need to demonstrate those attributes and those characteristics that you are sharing. So, thank you very much again, Chris, and viewers we appreciate your time.

Treanor: Thanks George, good to see you.

Bucur: Likewise, Chris.