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2017 brokerage revenue: $1.56 billion
Percent increase (decrease): 9.8%
Lockton Cos. L.L.C. continues to flourish as not only one of the largest privately held brokers, but as a family business as well.
Last year, Ron Lockton, who had served as the Kansas City, Missouri-based brokerage’s vice chairman for the previous two years, became president and CEO after Glenn Spencer, who had briefly served in that position, resigned for personal reasons. His father, Jack Lockton, who died in 2004, was the company’s founder, and Chairman David Lockton is his uncle.
Ron Lockton is well qualified, according to David Lockton. “He brings to the table 27 years at Lockton, so he’s intimately in touch with the Lockton culture. He knows all of our associates, and he enjoys our trust,” he said.
It has “been a smooth transition,” Mr. Lockton said. “I’m sure pleased with the great job he’s been doing.”
Meanwhile, Lockton remains the only privately held broker among Business Insurance’s top 10 commercial brokerages not backed by private equity firm.
“They’re distinctive,” said Kevin Stipe, president of Atlanta-based Regan Consulting Inc. “They are a privately held company that really operates similarly to a global broker in terms of the size and sophistication of the accounts they go after.”
In addition, “They are probably the most producer-centric broker in the top 10,” with “a very strong sales culture,” he said
For its part, Lockton’s executives have no plans to change what has worked so well for them. Its privately held status “is fundamental to our success in client service,” Mr. Lockton said.
Lockton reported $1.56 billion in 2017 brokerage revenue, a 9.8% increase from a year earlier, putting it in the No. 10 position in Business Insurance’s ranking of the world’s largest commercial insurance brokers, a notch down from its ranking last year.
“In general, we had a really good year financially, with a 9.9% growth globally,” Mr. Lockton said. “Our goal was double digits, so we fell slightly short of our goal, but we far surpassed our peers in the industry and we feel ... good about the future” because of Lockton’s “great talent,” he said.
He said other personnel moves during the year included the recruitment of Said Taiym as executive vice president-chief digital officer. Mr. Taiym previously served as senior vice president and chief information officer for Lansing, Michigan-based AF Group, a unit of Blue Cross Blue Shield of Michigan. “We’re really looking forward to the impact he’s going to have on our technology efforts,” Mr. Lockton said.
Among other awards, for the second year in a row Lockton was named the highest-ranking broker in risk management professionals’ estimation, according to a survey by J.D. Power, the Costa Mesa, California-based marketing information services firm.
The brokerage is also expanding. In addition to opening an office in Cairo, thanks to recruitment efforts, the brokerage has also opened new offices in Naples, Florida, Sacramento and Sonoma, California, and Portland, Oregon.
Other successful recruitment efforts include that of four former Aon P.L.C. brokers based around the country who joined Lockton’s Houston-based global energy and power business as senior vice presidents earlier this year.
A major acquisition this year was of Denver-based E3 Solutions, an enrollment and benefits administration firm. Mr. Lockton said, “We’ve always focused on organic growth, and we’ve not done a lot in the acquisition area yet have still been able to maintain double-digit growth.”
He added, however, that now “we’re more open to acquisitions than we have been in the past for the right small broker who recognizes the opportunity to grow.” Ron Lockton said, “There are certain areas of the U.S. where we don’t have a physical presence, and we’re actively looking at talking to different insurance brokers about expanding into those areas.”
One possible new area for the brokerage is alternative capital, said David Lockton. “I’m not sure exactly what we’ll do, but it’s an area we’re looking at with a great deal of interest,” he said.
Additionally, “We are really strong in political risk in our international operation, mostly out of London, and we are considering expanding that in the U.S. market,” he said.
In May, the National Rifle Association sued Lockton, charging the broker breached its agreement to run an NRA-branded insurance program. This followed Lockton’s agreement to pay $7 million to New York regulators to settle charges its “Carry Guard” program violated state law and breached excess and surplus lines placement rules. Company officials had no comment on the matter.
The commercial insurance market saw some rate increases over the past year, which provided a slight tail wind for brokerages, but the brokers that saw the largest revenue increases mostly relied on acquisitions to drive their growth.