USI plans organic growth with third reported acquisition
USI Insurance Services acquired Employee Benefit Concepts, a consulting and human capital management firm based in Buffalo, New York, marking the firm’s third reported acquisition this year.
Ed Bowler, USI’s senior vice president of corporate development and chief financial officer, says the brokerage’s strategy is to grow organically. “Acquisitions will remain a key strategy for USI throughout 2019 and beyond,” Bowler says.
See also: Insurance brokerage M&A not slowing down
USI acquired two other New York-based firms this year, USI told Employee Benefit Adviser. The terms of the three deals were not disclosed. In May, it purchased Chernoff Diamond, a retirement, risk management and benefit consulting firm. The brokerage struck a deal in February to acquire GFI Insurance Brokerage, which provides property and casualty, benefit and personal risk solutions to clients.
Tim Cunningham, managing director of the consulting firm Optis Partners says the acquisition of Employee Benefit Concepts is not surprising because USI already has a robust benefits practice and may be looking for quality over quantity, he adds.
“I think they want to grow through acquisitions organically,” he says. “They’ve [already] got a broad enough platform, product line and geography. I don’t believe they have any glaring holes in their network.”
The insurance brokerage industry soared to its highest number of acquisitions last year, topping off at 626 transactions, according to an Optis Partners report. There were 151 acquisitions in the first quarter of 2019, which is comparable with the 2018 Q1 total of 150. Cunningham says the continued M&A activity in the insurance space is relatively similar to what he has seen years prior, and so far there isn’t any sign of a slowdown.
Meanwhile, brokerages including Alera Group and Patriot Growth Insurance Services have been rapidly acquiring other firms. Alera Group, for example, completed its tenth transaction of the year in May, and since has continued to target other “high quality, like minded firms,” the company told EBA. Patriot Growth was the most aggressive acquirer in the first quarter, with 18 acquisitions total, Optis reports.
Benefits firm One Digital completed the largest acquisition in company history of Northwestern Benefit in April — ballooning the company to nearly 50,000 employer clients and more than 1,600 employees.
“Our industry is really going through a significant amount of change right now. It’s kind of the alchemy of the insurance industry,” says Mike Sullivan, co-founder and chief growth officer of OneDigital.
Christopher Fiorello, president of Employee Benefit Concepts called the deal with USI a “milestone” for the brokerage in a statement. Clients will now gain access to USI’s technology and other expanded offerings, he says.
“We will continue to work closely with our previous payroll and HR services colleagues, who will maintain normal business operations under the existing EBC brand,” he adds.