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Integro Continues to Have Growth Opportunities in Current Market
The three largest global commercial insurance brokers have grown substantially through acquisitions over the last decade, but the outlook for companies like Integro could be bright, as midsize brokers have continued to erode market share from the top players.
Peter Garvey, the CEO of Integro Ltd., a 3-year-old broker that competes for large complex risk business with leading players such as Aon Corp., Marsh & McLennan Cos. Inc. and Willis Group Holdings Ltd., said the confluence of factors has created an opportunity for a broker like his to grow: instability in the financial markets, tightening reinsurance capacity, rising insurance rates and increased concerns over carriers' financial strength.
"The subscription market is more important than ever," Garvey told SNL. "Finding what capacity is out there is more difficult than it's been before, so an intermediary is more useful now than in times where a carrier that's highly rated has all the capacity in the world to offer."
In the first quarter, Integro realized 16% organic growth, largely due to a high retention rate and new business, according to Garvey. The company made about $65 million in revenues last year.
Increasingly, the CEO added, commercial insurance buyers are looking for brokers that have no legacy issues and are small, but knowledgeable enough to provide personalized services.
At the same time, the effects of the financial crisis on major players such as American International Group Inc., XL Capital Ltd and Swiss Reinsurance Co. Ltd. have shaken the confidence of commercial insurance buyers, especially those with long tail exposure, according to Garvey.
"It's more anxiety-causing than anything else," he said. "These days, who do you look to? How do you tell one insurer is more stable than the other? Do you trust the rating agencies' analysis? Do you trust the broker's own financial analysis? Do you do it yourself?"
In the same way the companies are concerned about their carrier's ability to pay future claims, they're also choosing to obtain insurance advice from multiple brokers and not from one source.
Certainly, it is an advantage to Integro if clients feel having multiple brokers produces better results, said Garvey. "That means they're going to be interested in inviting us in. That is what has happened in the first three years of our existence."
Integro was launched in 2005 by industry veteran Bob Clements, who recruited Garvey and other former Marsh alums to run the company. Garvey had developed at Marsh a unit called National Broking that focused on middle-market insurance buyers.
At Integro, they decided to focus only on large, complex risks — a strategy that placed them in direct competition with the three big brokers. That battle rages on as the big brokers continue to swallow the few remaining independent boutique brokers.
Garvey said the "overconsolidation" in the space means fewer alternatives for clients and less competition for Integro.
"When we look at the complex risks market in North America, there are fewer and fewer good choices," he said. "The way we look at it is there is us, and there are the big institutional legacy brokers."
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