View from the top: Jim Blue, Alera

Jim Blue entered the insurance sector straight from college via Prudential Financial Inc.’s life insurance training program. He later founded an employee benefits brokerage that was bought by Marsh McLennan Agency in 2010. In 2018, he left MMA to join Alera Group as president a year after the acquisitive, private-equity-backed brokerage launched. On Jan. 1 of this year, he took over from Alan Levitz as CEO, while Mr. Levitz became executive chairman. Business Insurance Editor Gavin Souter recently spoke with Mr. Blue about his integration plans for the company, the environment for mergers and acquisitions, and the outlook for the market. Edited excerpts follow.

Q: As you start as CEO of Alera, how do you see the current state of the company?

A: We’re in good shape. We want to continue with the focus on organic growth and mergers and acquisitions, but I would add more work on integration and performance. We have done 220+ acquisitions and need to bring them together as colleagues. If we do a good job on that, we’re going to take better care of our clients, and we’ll perform better as well.

Q: How are the acquired companies working together? 

A: It’s a transition process. For the first few years, we want them to get really accustomed to our collaborative culture and how we do business. We want to know what they bring to the table, so there’s a few years of just leave them alone, and then we start to do more integrations. It’s mostly back office and the services they bring to their clients. It’s trying to take what they do best and export that to other firms, and then what other firms might do best import that into their firm.

Q: Looking through the acquisitions, where do you see some strengths of acquired companies that you would want to share with the other firms?

A: By far, it’s the technical expertise of the people we have brought together. So, an example is captives. We have an organization that is based out of Boston (Spring Consulting Group), and they brought a captive expertise that many of our property/casualty firms are taking advantage of. So, they’ve been able to leapfrog in their own understanding of how a captive works and what you need to do to be able to bring that solution to clients.

First and foremost, with any of our M&As, it’s about people first, and then it’s about what they bring to the table second.

Q: M&A has been an up-and-down environment over the past few years, with COVID disruptions and then interest rate increases. How do you see the market at the moment?

A: We’re still active. I’d say we’re a little more measured than we might have been in the past because there are a lot of buyers out there, so we’re trying not to get into a frenzy with bidding wars and all that stuff. What we really love to see are people that want to continue to be in the business, and they want to continue to grow and take advantage of the other things that we brought to the table as well.

Q: Brokerage valuations have been pretty high over the past couple of years. Do you see any changes there? 

A: I think they’ve stayed pretty much there. I have not seen a lot of changes.

Q: What’s driving that?

A: It’s good old-fashioned supply and demand. That’s why we’re trying to be a bit more measured, because we know there are 30 to 40 buyers, and that just wasn’t the case 10 years ago. But, also, 10 years ago interest rates were in a different place.

Q: You had your last private equity recapitalization in 2021. Five years is often the traditional time frame for that type of thing, so should we be expecting a new recap soon?

A: What I can share with you is that I would not expect anything soon, meaning imminent, but we are absolutely looking at options. We want to be in a position to take advantage of opportunities in the marketplace — so imminent, no; longer term, yes.

Q: Would that be a traditional recap, or would you also look at other options?

A: Other options as well. I don’t think we should take anything off the table. I don’t think that would be prudent.

Q: How do you see the insurance market at the moment?

A: Rates are moderating, but I wouldn’t exaggerate that because we have a couple of areas, whether it’s cat exposures, which is obvious, but also maybe some AI exposures that we don’t quite understand. Those rates continue to climb. So, overall, I would use the term moderating, which I think a lot of our clients are appreciating, but we’re very careful not to cover the marketplace with a blanket on just one view.

Q: Circling back to where we started, a lot of integration is focused on things like bringing in common technology, etc. How do you see that changing your business?

A: It’s a critical part of our business, and we’re looking very closely at it. So, we have for many years made moderate changes, as we have been bringing firms together. That could be agency management systems, that could be client-facing technology, and we have to continue down that road and accelerate it a bit simply because we see the benefits of bringing things together. It benefits our clients, and it benefits our colleagues and how they’re doing business on a day-to-day basis.

Q: Would that include artificial intelligence facilities or using that technology to speed things up or improve access?

A: Absolutely. On the AI front, I would say that’s more back office, more administrative. I think the client-facing area of AI is still very much in its infancy, so we’re keeping our eyes open there. But on the back office and how we’re working with our partners, be they third parties or be they internal, we have to constantly be taking a look at that.