Seeking the right fit: Amwins’ acquisition spree continues

Amwins is the largest wholesale distributor of specialty insurance products and services in the US. In April, it completed its latest acquisition—of Worldwide Facilities, the country’s fourth-largest wholesale broker—bringing its total over the last two decades to 52.

It’s unlikely to be the last—the company continues to grow under Scott Purviance, who has been with the company for two decades. He took over as chief executive officer three years ago, and in that time, revenue has almost doubled from $1 billion to $1.8 to $1.9 billion. Already, the company operates more than 125 offices globally and handles premium placements of over $22 billion annually.

To discuss the recent acquisition and Amwins’ plans, Purviance joined the latest session of Intelligent Insurer’s Re/insurance Lounge, the online, on-demand platform for interviews and panel discussions with the market’s leading players.

Trying for size
For Purviance, the key to a successful acquisition is a close cultural fit.

“The number one thing we’ve looked for in all the acquisitions is it going to be a cultural fit,” he said. The second is a strategic fit. “Usually, if those two things fall in place, you can figure out the economics.”

The success of the approach is proved by the fact that no principal has ever quit the firm to go elsewhere after joining the group, he added.

In the case of Worldwide Facilities, a vital quality it shared with Amwins was high levels of employee equity ownership. Together, the combined group has 1,000 employees who own about 45 percent of the business. They’re central to the firm’s future, said Purviance, because it’s not interested in growth only through mergers and acquisitions.

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“Developing new brokers and underwriters inside our firm has been a real organic growth engine over the last 10 years,” he explained.

As well as a broking business, the firm has two underwriting businesses: a programme underwriting business providing niche classes where it has underwriting authority on behalf of its carrier partners; and a small commercial and personal lines platform where, again, it has delegated authority.

“We’ve built out a broad-based underwriting infrastructure to support those underwriters and provide our carrier partners with real-time transparency into the portfolios we are underwriting on their behalf,” Purviance said.

Taking the long view
That’s one of the benefits of scale, as Purviance sees it—for every side of the business.

“It wasn’t just size; it’s what scale allows us to do,” he said. “It allows us to invest in our platform and our tools for our brokers to then be better partners with our retail clients.”

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More generally, the business is trying to ensure it can offer expertise increasingly demanded by retailers across a broad range of areas.

“There’s a lot more expected of a wholesaler today than 10 or 15 years ago,” he explained. “It’s no longer acceptable to be a generalist; you need to be a specialist. You need to know what you’re good at—not only a line of business but, within that, a class of business.” Retailers demand not just a property specialist but a public entity property specialist, for example.

As a result, growth and Amwins’ interest in acquisitions are likely to persist longer than the current market conditions. As it is, three years into the hardening market, Purviance believes that, while it may not be coming to an end, the rate of increases slowing—albeit with exceptions in some lines such as cyber.

Just as rates rose slowly at the start of the harder period, however, any softening is likely to see a plateau rather than a crash, he added.
“I think the downside will be gradual as well,” he said.

Regardless, the company is “agnostic” when it comes to the market cycle, maintaining a much longer-term focus. “We talk all the time internally about building a 150-year business,” said Purviance.

That’s supported by a capital structure that includes not just the 1,000 employee-owners but also two long-term partners: PSP Investments, the Canadian pension fund investment manager; and Dragoneer Investment Group, a San Francisco based firm with an “evergreen bucket of capital” that allows it to take an equally long-term view.

“We have two long-term partners that are going to allow us to continue on this journey,” Purviance said.
“We don’t rush.”

To view the full Re/insurance Lounge session click here.