2019 brokerage revenue: $1.81B
Percent increase (decrease): 31.1%
Acrisure LLC sealed more than 100 acquisitions last year and it’s on course to complete a similar number in 2020, despite the physical limitations imposed during coronavirus lockdowns.
The Caledonia, Michigan-based brokerage, which has consistently bought more rivals than any other U.S. broker over the past several years, acquired more than $400 million in revenue in 2019, boosting its brokerage revenue total by more than 30% to $1.81 billion.
The coronavirus pandemic has slowed larger deals, and organic growth, which has hovered around 4.5% for the past nine years, will likely decrease, but revenue will continue to rise at a rapid pace this year, said Acrisure CEO Gregory L. Williams.
In addition to postponing some larger deals until later in the year, the brokerage reacted to the slowdown in business resulting from decreased economic activity during the pandemic by slashing executive pay, he said.
Acrisure first entered the Business Insurance ranking of the world’s 10 largest insurance brokers last year and it remains the 10th-largest brokerage. Founded in 2005, the brokerage has completed more than 450 acquisitions, with about 80% of the deals coming through referrals from existing partner firms.
Many of the acquired brokers and agents maintain their own identity, member firms own most of the parent company and, although some corporate functions are centralized, the individual brokerages maintain a significant degree of autonomy while operating under the Acrisure corporate umbrella.
A challenge for many acquisitive brokers this year, including Acrisure, has been how to continue to negotiate deals amid government-imposed lockdowns that started in March and continue to varying degrees in many states, said Timothy J. Cunningham, managing director of Optis Partners LLC, a mergers and acquisitions advisory firm and consultancy in Chicago.
“Zoom and WebEx calls are fine, but if you can’t look a person in the eye and get a feel for their body language, it’s difficult to really understand what’s going on,” he said.
Acrisure continued to complete deals through the lockdowns, Mr. Williams said. The brokerage agreed to about 75 deals through June and expects to get close to 100 by year’s end, he said.
Some of the deals completed in the second quarter began with meetings prior to the lockdown, but some smaller transactions were closed completely through virtual meetings, Mr. Williams said.
“We’ve been careful and thoughtful in not doing anything too significant without having face-to-face meetings,” he said.
As of last month, the brokerage had about $2 billion in revenue and $750 million in earnings on a proforma basis, Mr. Williams said.
Prior to the lockdown, Acrisure also raised $750 million in debt for acquisitions and repriced its existing debt, he said.
Acrisure’s acquisition record remains strong, said Chris Scott, assistant vice president at Moody’s Investors Service Inc. in New York.
“There are concerns when any company is growing that fast – whether the integration can be done smoothly – but over time they’ve developed a strong integration process,” he said.
Moody’s looks closely at debt-to-earnings ratios when assessing brokers and “most of the brokers, including Acrisure, stay within that defined metric,” Mr. Scott said. “We continue to monitor that as acquisitions continue.”
In addition to adjusting its acquisition strategy during the lockdowns, Acrisure added resources to address financial issues other than insurance, Mr. Williams said.
To help businesses confused by the process of accessing government funding programs introduced during the pandemic, Acrisure contracted with Hector Barreto, former administrator of the U.S. Small Business Administration, to provide webinars and advisory services to its clients, Mr. Williams said.
“We focus on insurance, and that’s our day job, but if there’s anything we can do to help our clients, we ought to be taking on that role as well,” he said.
Although insurance prices have continued to rise this year, decreases in general economic activity due to the pandemic will likely hit Acrisure’s organic revenue and the brokerage has adjusted executive pay to offset some of those declines, Mr. Williams said.
In April, Mr. Williams took a 97% pay cut and other senior Acrisure executives also took significant cuts.
In addition, more than 200 other leaders at Acrisure units offered to take cuts, he said.
