CRC sees M&A opportunities in transactional broking, MGA and binder segments

Despite heavy consolidation in the transactional wholesale brokerage space, big three firm CRC Group continues to eye opportunities to buy in the segment, as it also actively pursues M&A deals to continue the build-out of its MGA platform and binding authority business.

Speaking to The Insurer TV for the latest in its Leading Voices series, CRC Group CEO Dave Obenauer said the wholesale sector is marked by a “constant evolution of new ideas, creative solutions and opportunities to deliver better to clients”.

He added that as a highly entrepreneurial segment of the insurance industry, there are always people and businesses to think about combining with through acquisition or recruiting.

“So we remain very opportunistic about the transactional space as we think about the platform we’re building. Given our scale and breadth some of those newer ideas and opportunities fit very well in our space,” said the executive.

Fresh from this summer’s acquisition of Constellation Affiliated Partners, Obenauer also highlighted the opportunity to build out CRC Group’s newly formed Specialty Programs Division.

Acknowledging the competitive landscape for MGA and program administrator M&A, he said the firm is “very selective” in the deals it pursues and focused on finding targets that are a strong cultural fit as well adding to its capabilities.

“Our general focus is on finding ways to fill out white spaces by product, geography and industry and there’s plenty of opportunity in all those.

“We benefit from Constellation bringing a lot on board as of 1 July and there’s plenty of opportunity to expand what they do as we round out opportunities within Constellation and then more broadly across the spectrum within the P&C landscape,” Obenauer commented.

The new division houses MGAs and program business that represent around $2.4bn of premium, and the executive pointed to the benefits that scale presents when it comes to carrier relationships and delivering unique products to clients.

Binding opportunity

Arguably the biggest opportunity for the big three wholesalers is in the consolidation of binding authority business, which is at a much less advanced stage than transactional brokerage or MGA business.

Obenauer said M&A in that segment is being driven by the same forces that have led to consolidation in transactional brokerage.

“Clients want to be able to access fewer distributors, or wholesalers that can service their needs. Historically the binding business in particular has been characterised by being a locally appointed wholesale authority by a carrier.

“We’ve begun to change that and now have many national appointments that allow our clients to access what they need regardless of where their insured is located,” he observed.

The CRC Group CEO said that the focus is now on building out its binding authority platform as the firm identifies opportunities in geographies and product lines it is looking to expand into.

Part One of our interview with Dave Obenauer can be watched here. In it we discuss the growth of the E&S market and pricing momentum.