Top insurance brokers, No. 8: Lockton Cos. LLCPosted On: Jul. 1, 2019 12:00 AM CST
2018 brokerage revenue: $1.71B
Percent increase (decrease): 9.1%
Lockton Cos. LLC values its private independent brokerage status, and there are no plans for that to change even as it expands into new geographies and builds its reinsurance infrastructure, according to company officials.
The Kansas City, Missouri-based brokerage reported $1.71 billion in 2018 brokerage revenue, a 9.1% increase from the year earlier, putting it in the No. 8 position in Business Insurance’s 2019 ranking of the world’s largest commercial insurance brokers, two notches up from the previous year’s ranking.
“I couldn’t be more pleased with our year-end results,” said Ron Lockton, president and chief executive officer.
Lockton remains the only privately held broker among Business Insurance’s top 10 commercial brokerages not backed by a private equity firm or a hybrid of private equity and private ownership.
Mr. Lockton said that as a “truly independent” firm, “when we talk about value creation, we always mean about creating value for our clients” without being concerned about creating value for shareholders or investors.
“We feel that staying private or independent is a competitive advantage,” and there are no plans to change, he said.
Lockton is an attractive employer, according to company officials and an analyst.
“We’re having a lot of people reach out to us, wanting to join us, because our model is differentiated right now,” said Peter Clune, president and chief operating officer of U.S. operations.
The company has hired 160 producers and hundreds of associates over the past few years and “that’s really contributing to our growth,” he said.
“A little old company headquartered in Kansas City has become a small global powerhouse, and I believe in some cases has become a very preferred employer,” said Timothy J. Cunningham, managing director of Optis Partners LLC, a mergers and acquisitions advisory firm and consultancy in Chicago.
The brokerage has enthusiastically embraced insurtech. Mr. Lockton pointed to Said Taiym, who joined Lockton as executive vice president-chief digital officer in 2018 from Lansing, Michigan-based AF Group, a Blue Cross Blue Shield of Michigan unit, where he was senior vice president and chief information officer.
While Mr. Taiym has been at Lockton for less than a year, “he’s mapped out a digital strategy over the last year to help us improve security and operational efficiency and harness the power of data for the benefit of our clients as we continue to refine our client engagement processes.”
Lockton is making investments both to automate the transactional side of the business as well as to focus on analytics “to provide deeper insight to our clients,” Mr. Clune said.
The brokerage is also entering new geographical areas around the United States, including New Orleans and Pittsburgh.
“Then at the same time we’re recruiting deeper within ‘verticals’ and specialties,” he said. “Construction, real estate, private equity and health care are four of the specialties that we’re having huge growth in, and we’ve also added a power team to our energy practice this year.”
Mr. Lockton said, “We talk about industry specialization as being vertical, but we’re also product driven,” which includes “building out our cyber team and expertise on a global basis.”
Another potential area of growth for Lockton is in reinsurance, with the broker announcing in March that it was forming a global reinsurance business called Lockton Global Re, and hiring three former Guy Carpenter & Co. LLC executives to run it. But Guy Carpenter filed suit in May against the executives over their departures.
Mr. Lockton and Mr. Clune did not add to the brokerage’s previous statement that the executives “determined that the best place to build a career in reinsurance brokerage is with Lockton.”
Lockton officials also had no additional comment on litigation that Lockton filed against Alliant Insurance Services Inc. earlier this year for allegedly poaching 26 of its employees.
Lockton makes relatively few acquisitions. “We’ve grown more organically, but we wouldn’t rule out looking at acquisitions going forward,” Mr. Lockton said.
Last year, Lockton purchased a 50% stake in Turkey-based marine broker Omni Insurance and Reinsurance Brokerage Services Inc. The deal was part of Lockton’s global marine strategy, said Mr. Lockton.
“I would say that we are probably more acquisitive internationally than we have been in the U.S. in the past, and we continue to look for ways to scale or business internationally,” he said.