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EPIC to buy US operations of Integro

EPIC to buy US operations of Integro

EPIC Holdings Inc.’s acquisition of Integro Group Holdings Inc.’s U.S. operations will significantly bolster its business in the United States while permitting Integro to focus on its London operations, says an analyst.

The deal comes 13 years after a group of former Marsh & McLennan Cos. Inc. executives established Integro as a proposed alternative to Marsh, Aon PLC and what is now Willis Towers Watson PLC in the wake of the Spitzer investigations.

Terms of the transaction to buy Integro Holdings Inc. announced on Monday, which includes substantially all the broker’s U.S. operations, were not disclosed. 

Integro is the 21st largest broker of U.S. business, according to Business Insurance’s latest ranking, with $205.4 million in U.S. brokerage revenue in 2017.

San Francisco-based Edgewood Partners Insurance Center Inc., which does business as EPIC Insurance Brokers & Consultants, ranked as the 15th largest broker of U.S. business, according to Business Insurance’s latest ranking, with $374.4 million in U.S. brokerage revenue in its 2017 fiscal year, which ended Aug 31.

An Integro spokeswoman said in an email that Integro’s operations in the United Kingdom will continue to operate independently, with its U.K. wholesale operations operating under the Tysers name in January. 

Integro acquired U.K.-based insurance and reinsurance broker Tyser and Co. Ltd.’s parent firm in June., with plans to merge its wholesale and retail operations with Tysers following the acquisition.

The broker’s U.K. retail operations – including entertainment and sport – will remain unchanged and operate as Integro, according to the spokeswoman. The U.K. operations have about 800 employees and $200 million in revenue, the spokeswoman said. The Bermuda office will remain part of Integro, she said.

Timothy J. Cunningham, principal at Optis Partners LLC, a Chicago-based investment banking and financial consulting firm, said Integro’s move to sell its U.S. operations was not a surprise because it was  “fairly clear” Integro was “becoming more of a significant factor” In London, while the U.S. business “just wasn’t there.”

This created uncertainty that has “probably been a bit of a drag on the Integro team,” he said. This deal “is going to be liberating” for U.S. Integro employees, he said.

From EPIC’s perspective, the transaction “adds a significant amount of revenue” as well as “some pretty talented people in certain niches,” said Mr. Cunningham.

The deal is the second significant deal for EPIC in the past 14 months. In October 2017 it announced it was buying Frenkel & Co.

Integro’s parent company has 32 offices, including offices in Bermuda and the United Kingdom, and reported 2017 gross revenue of $275.1 million. About 75% of its clients are U.S.-based, 61% of its business is retail, 24.3% is wholesale, 4.5% is personal lines and 3.2% is reinsurance.

Pete Garvey, EPIC Insurance Brokers & Consultants CEO, is a founder and former CEO of Integro Ltd., which was founded in 2005 by several former executives of Marsh & McLennan, including Mr. Garvey, a former senior executive in its brokerage unit, and the late Robert Clements, former president of Marsh & McLennan.

The executives formed Integro in the wake of investigations into the insurance brokerage industry by former New York Attorney General Eliot Spitzer. At the time, the executives said there was insufficient choice of brokerages for large commercial clients.

After it became clear, however, that big commercial clients were largely sticking with Marsh, Aon and Willis despite the reputational hits they took during the investigations, the brokerage adjusted its plans to focus on specialty business.