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How does a new insurance broker grow to become the 11th largest in the world in just four years -- especially during a soft market?

It takes vision, hard work and focus, said Bernard H. Mizel, president and chief executive officer of San Francisco-based USI Insurance Services Inc.

He sees what he does as a vocation more than a career.

"This is an evangelistic company and we are evangelists. We go out and talk to people about turning dreams into reality. That's what USI is about."

"This is not about just making money; this is about creating a model," he said. "That's the only way that we could get where we are today."

But USI's success also is largely attributable to Mr. Mizel's experience and energy.

"His enthusiasm is contagious," said Jay Cohen, a New York-based vp at Merrill Lynch & Co. "He has the experience and has built some pretty good companies in the past."

Mr. Mizel said: "Everybody I acquired, I learned from them. So all this was cumulative. The only thing I feel badly about is, it took me a long time to clear my vision, to get something that really made sense. And not 'til five years ago did I really, really understand how to do this."

Since its formation in 1994 with funding from private venture capital sources, USI has grown into the 11th-largest broker in the world, with 1997 revenues of $236.2 million.

Mr. Mizel's company is so successful, in fact, that a consortium of insurers and one major bank has decided to buy out some of those initial shareholders and take a majority stake in USI (BI, July 27).

Not bad for a guy who never went to business school.

Mr. Mizel, 62, earned a bachelor's degrees in English and history from the University of California at Berkeley, and, after that, "I went to law school, but I hated it."

Mr. Mizel began his insurance career in 1959 as an account executive with Levin, Knox & Co., a San Francisco brokerage. Four years later he purchased broker Albert M. Bender & Co., which had annual revenue of about $200,000.

With a team of aggressive producers that he assembled, Mr. Mizel built the company into a firm with $7 million in revenues, which he sold in 1978 to Bache Halsey Stuart. Remaining on as chairman and chief executive officer, Mr. Mizel took the company, renamed Bache Insurance Services, to $100 million in revenues, making it by 1982 the 10th-largest commercial insurance brokerage in the United States.

At that time, Prudential Insurance Co. of America purchased Bache and spun off the brokerage to Jardine Insurance Brokers Inc., where Mr. Mizel stayed on as president and consolidated the U.S. operations with Jardine's London and Hong Kong businesses.

Mr. Mizel left Jardine in 1984 to form American Business Insurance, which grew under his leadership to more than $100 million in revenues in 1993 through acquisitions of more than 50 agencies and books of business. Just prior to its 10th anniversary, ABI had grown into one of the country's 10 largest brokerages and was purchased by Acordia Inc.

Then Mr. Mizel took some time off -- about a year -- to decide what to do next.

"Five years ago, I sat back and studied the distribution of financial services in every aspect: bank distribution, securities distribution, life insurance, property and casualty, the pension business, everything," Mr. Mizel said.

"I hired two investment bankers to actually help me do this," he added. "The reason I wanted to do that is I needed to determine whether in fact there was a need for the creation of another insurance brokerage firm as we have known them in the past," he explained.

"What we found was there was incredible need for a distribution system that was multifaceted, that could cross-sell, that was fully integrated and could offer a multiplicity of financial services to the middle-market customers," which he defines as those with 100 to 2,000 employees.

While many of the large retail brokers have divisions or subsidiaries that provide many different types of financial services, none was fully integrated in a way Mr. Mizel thought was necessary to adequately serve the needs of middle-market clients.

"One of the things that just hit us was (that) these companies were financial service distributors, but they weren't fully integrated, and they didn't talk to each other internally. They had their financial services piece, but did they all integrate together? No. Did they all talk to each other? No. Did they all cross-sell their customers? No."

He also found that many insurance companies with both life and property/casualty operations "didn't even talk to each other effectively," he said.

"So we said, 'Wow, that's an opportunity,' because clearly in the middle market are people who needed to find a better solution to purchasing the products that they need," he said.

"What we determined was that that menu was gigantic, and that if you could penetrate that menu effectively, that your margins would be substantially better than a traditional brokerage operation," Mr. Mizel said.

He also determined that emphasizing cross-selling would enable a broker to grow organically, not just through acquisitions.

Still, much of USI's growth to date has come through acquisitions. In fact, eight acquisitions were completed in just the past two months:

* J.M. Kolisch Insurance, a risk management and property casualty brokerage firm in Coral Gables, Fla.

* Cummings & Associates Inc., an employee benefits brokerage in Seattle.

* Technical Risk of Louisiana, a property/casualty brokerage serving the marine and energy industries based in New Orleans.

* deMontluzin-Spatz & Associates, a life insurance and employee benefits brokerage in Metairie, La.

* J.J. Newman & Co., a third-party administrator in Garden City, N.Y.

* Holtemann, Ord & Smith, a property/casualty brokerage in Petaluma, Calif.

* Colburn Insurance Service Inc., a property/casualty and affinity marketing broker in Media, Pa.

* InLine Financial, a financial services and employee benefits firm in Boca Raton, Fla.

Altogether, USI has completed 77 acquisitions since it was created June 1, 1994. It completed 17 in 1997 and 16 so far in 1998.

All of the purchases "fit in with our strategy of doing fully integrated financial services and insurance distribution," said Rebecca Cardamone, USI's vp-marketing, planning and communications.

"And John Adeo did them virtually all himself," Mr. Mizel added, referring to USI's president, who formerly was an executive with Frank B. Hall.

David Eslick, a specialist in cross-selling from ABI, heads the training program for new people added as a result of the acquisition binge.

"We have gone through and retrained all of our sales people. Every one of our sales people has been retrained to think in a totally different way than any other broker in the United States," Mr. Mizel said.

"They're trained to think that if they do not offer a wide menu of products and services to their client, that not only are they leaving all the profit on the table, but basically they're not serving the needs of their client efficiently and effectively," said Mr. Mizel. What property/casualty insurance "has become is nothing more than a commoditized product that everybody can sell at a cheap price. So there's no added value that any broker truly can offer that somebody else doesn't say that they can do the same," he said.

In addition, "when you're selling a commoditized product, each year you're facing the possibility of someone else coming in and offering it 5 cents lower."

By contrast, "we want to offer a service so people don't view us as somebody out there just trying to sell a price," he said.

For example, besides only selling insurance to clients, USI offers many other services, including third-party claims administration, payroll and personal lines products.

In selecting acquisition targets, Mr. Mizel spoke only with those brokers and financial service industry specialists who shared his vision.

In pre-merger discussions, Mr. Mizel offered: "if you come and join hands with us, we will provide you capital to grow your business. . . .What we want to do is help you to do something that you can't do on your own. We're going to make you a fully integrated financial services distributor. We're going to help you to acquire other firms that will help you to participate and grow. And so we become partners together," he recounted.

"Everybody had to be a shareholder in USI, because I was interested in partners, not employees," Mr. Mizel stressed.

As a result, Mr. Mizel has assembled a brokerage that covers a wide spectrum of the industry. USI includes some of the oldest firms in the United States and some of the youngest executives, many of whom are under 45.

"We always looked for youth, aggressiveness, passion, desire to grow and somebody who would buy into our vision," Mr. Mizel said.

"We want people to get a great sense of personal achievement, a sense of fulfillment, and that's just as important as the monetary benefit, because when they come to work, they want to get a sense that they've got something out of their life," Mr. Mizel said.

Mr. Mizel asks senior management two questions every month: "Are you happy? and, 'Are you challenged?"

"The last guy I asked said, 'I am happy and I am so challenged I don't sleep at night.' "

When USI was launched in 1994, it expected to generate $150 million in revenues within five years.

Yet USI surpassed that goal in just three years, generating $163.2 million in revenues in 1996. Last year, revenues climbed another 45% to $236.2 million, making it the 11th-largest insurance broker in the world.

Now Mr. Mizel has set his sights even higher.

"We feel this year for sure we'll break $300 million; we think that within two years we'll be $500 million; we feel that within five years we'll be $1 billion," he predicts.

But, as USI grows, its challenge will be to retain the culture Mr. Mizel has nurtured.

"I talk to all of my senior management and I tell them that the real test of leadership is to be able to put your arms around these people and give them a sense that if they work hard, they will have an opportunity that they're going to be acknowledged for their achievements," he said.

As a means to this end, USI has assembled a team of 10 young executives from its acquired companies to be trained to take over USI, with Mr. Mizel, Mr. Adeo and Mr. Eslick serving primarily as consultants to the team.

"This is how you build continuity and perpetuation," he explained.

"We are turning over the management of this company to those 10 people. In order to give them true empowerment, they've got to have a say in what's going on."

To prepare them for this role, these young leaders were trained over the past year and a half in conducting acquisitions and consolidating those purchases into the brokerage; cross-selling; creating strategic alliances; and financial models, Mr. Mizel explained.

To show its commitment to management training, USI even has on staff a psychologist-consultant who evaluates executives' leadership skills.

Every region is represented on the executive board, which meets quarterly.

The next tier of 10 executives already has been selected, and training at "USI University" begins this month in Chicago.

"What I have found in institutions is they tend to erode after a period of time. You get this visionary and you get this leader who comes in and he creates a great company, then when he passes on or he leaves, the momentum stops. We're scared of that," Mr. Mizel said.

"So I felt that if we did it the way I've just described, that we could keep this momentum, keep this excitement, keep things happening.'