Twenty-four independent employee benefit, P&C, risk management and wealth management firms across 15 states — with $158 million in annual revenues and 20,000-plus clients — have joined together to form Alera Group.

The new company, launched Wednesday, will become the nation’s 14th largest private insurance firm and 7th largest private employee benefit firm, with more than 750 employees in 40 offices.

Based in Deerfield, Ill., Alera was formed with investment from Genstar Capital LLC, a middle market private equity firm with experience in the insurance field, and brokerage assistance from consulting and investment banking firm Marsh, Berry & Company Inc. Exact terms of the deal were not disclosed.

The new firm’s executives include industry veterans Alan Levitz (chief executive officer), formally CEO of GCG Financial; Billy Corrigan (chief financial officer), formerly CFO of the international division at Marsh; Rob Lieblein (chief development officer), formerly EVP of the M&A team at Marsh, Berry & Co. Inc.; and Peter Marathas (chief legal counsel), formerly partner at Marathas Barrow Weatherhead Lent LLP.

The 24 firms were selected out of discussions within Benefit Advisors Network and then by reaching out to other companies that would be a cultural fit, Levitz explains. The agencies were brought together to better serve clients, Levitz says, through tighter collaboration, shared expertise and leveraging resources.


Sharing the BAN affiliation and platform will set the new firm apart, Levitz says. Twenty of the 24 founding members of Alera were existing BAN members. “We already have the underpinning of a very fine platform,” he says of BAN. “We are not just putting firms together to aggregate revenue. By having that platform, we think we can better serve clients.”

“We were attracted to this group of companies because they had all worked together as part of Benefit Advisors Network and were growing organically at rates higher than the employee benefits industry growth rate,” says Ryan Clark, president and managing director of Genstar in San Francisco.

The news of a private equity firm backing the formation of a new brokerage is not surprising, says Mark Smith, CEO of New Boston, N.H.-based business data analytics company miEdge. However, Smith does find surprising the number of firms involved at once. “This must have taken quite some time and organization — particularly on Marsh Berry’s side,” he says.

Levitz says discussions started more than two years ago, with work on the new company beginning 18 months ago.

Smith, whose firm compiles EBA’s listings of the top brokers in the country, says this news will definitely affect those rankings, and he expects to put together a new list later this month.

Pressure to sell
Meanwhile, agency consultant Nelson Griswold, president of Nashville-based Bottom Line Solutions,— who knows and has worked with several of the firms now part of Alera — says overall such large mergers are “a systemic problem in our industry that will lead to the death of the independent agency model.”

Griswold says the industry is ignoring a huge elephant in the room: So many agency leaders are selling long before they are ready to give up control and lose their independence.

“I’m confident that, other than demographics, the biggest driver of consolidation is agency leaders’ not knowing what to do to stay competitive,” he adds. “I regret we’ll continue to see agency leaders sell and give up control simply because they haven’t discovered yet what’s next for their agency.”

However, Levitz says in the case of Alera, the company was formed from a place of strength. “Successful firms come together when they are like-minded, sharing common goals, and believe that they are even stronger together,” he says. “ What is truly incredible about this transaction is that very successful firms have been able to join together to create a powerhouse company that believes its clients deserve an exceptional experience.”

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Regardless of reasoning, Wendy Keneipp, partner at brokerage consulting firm Q4intellegnece in Bellingham, Wash., says any time news of a merger surfaces independent brokerages feel pressure. “I do think that this is going to further fuel the pressure so many agencies are feeling to take a similar course of action,” she says. “That’s a message we hear a lot — the pressure, the need to sell. It’s almost like they see it as the inevitable outcome and it’s just a matter of when their turn comes up.”

Kevin Trokey, partner at Q4intellegnce in St. Louis, adds that while he cannot speak to the individual motivation or circumstances of any of the agencies involved in this specific merger, such moves always concern him. “It’s scary times for independent agencies,” he says. “They are scrambling to figure out how to remain relevant. Many seem to think that relevance is the result of being bigger. I disagree.”

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But, Alera’s Chief Development Officer Lieblein says size and scale are critical in the “extremely fragmented” insurance industry.

“Size and scale are critical to be able to effectively invest in resources and capabilities to meet the demands of clients,” he says. “In my 25-plus years of experience I typically see high performing firms merge with other entities and experience growth rates that are greater than the average independent firm. The experience and results of our capital partner, Genstar, demonstrates that the consolidation of multiple firms results in a stronger overall organization than firms that remain independent.”


Future growth
Levitz says he is excited Alera is off to a good start. He says in the future Alera will “absolutely look to acquire firms that fit from a business and cultural prospective.”

Alera’s committed focus on clients will lead to growth both organically and through strategic acquisitions, adds Lieblein. “Alera Group’s business model provides a unique opportunity for other entrepreneurial financial services firms to grow their business,” Lieblein explains. “This is a chance to be part of a larger, innovative organization while retaining equity in Alera Group.”

Smith, of miEdge, believes that Alera “clearly isn’t going to be stopping with this first round of 24 acquisitions.”

“It will be interesting to see what their long-term strategy will look like and the impact on the other large brokers in this space,” Smith adds.

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