Mike Rice joined CAC Specialty as CEO at its creation in 2019 after spending four years leading JLT Specialty USA. Prior to that, he was at Aon PLC, where he began in management and professional liability and took on roles of increasing responsibility over 23 years. CAC Specialty began as a sister company of Birmingham, Alabama-based Cobbs Allen, a well-established small- and middle-market brokerage, and the companies merged in late 2022 to form CAC Group, with Mr. Rice as CEO. CAC Specialty had about $200 million in revenue in 2023 and CAC Group more than $260 million. Denver-based Mr. Rice recently spoke with Business Insurance Editor Gavin Souter about the company’s strategy and outlook. Edited excerpts follow. 

Q: You’ve seen some significant growth since the company was formed. Where did it come from?

A: We picked our spots, we did our homework, we knew what regions of the country we wanted to operate in, we knew we wanted to be specialists, not all things to all people, and we stuck to that strategy.

We entered the market when the market was getting a little bit more difficult, but five months after we started the business we sent everybody home for COVID. That’s a really daunting prospect when you’ve recruited 100 people to join a firm. One thing that turned out to be really fortuitous for us was we … had a bankruptcy practice and as COVID hit we started to pick up a lot of business. I would much rather COVID had never have happened, and I still think we would have grown at the pace we are growing, but our growth was maybe a little bit different than what we expected. 

Q: What sort of coverages come into play there?

A: 90% of it is on the D&O side. You need to bring in new leaders, and they want to make sure they have D&O coverage for them and it isn’t tied to the former leadership team.

Q: What are some of the other areas where you’ve seen growth?

A: Our biggest single product line is our directors and officers liability practice. Our next biggest practice is transactional liability, which specializes in reps and warranties, tax indemnities and contingent liability. We had a stellar year last year, despite the fact there wasn’t a lot of M&A. The fact that we had such a strong tax practice and contingent liability practice really carried the day, and that practice more than doubled in size. 

The next biggest practice is probably our property/casualty practice and after that our natural resources practice. Cyber has been a really interesting topic, and we’re growing very well on the cyber side. We invested in a senior living and health care team and that’s really starting to grow, and there are other specialty practices we’re involved in.

One of the things about us that makes us different is this investment we have in Dorset Peak, which is our investment banking operation that specializes in insurance transactions, at the intersection of traditional insurance markets and capital markets. It can do very interesting things with captives and financings around insurance products and debt. It’s really allowed us to be creative in our insurance placements. 

Q: D&O rates have been declining, so how are you managing to grow that practice?

A: It’s a tough one. Rates went up tremendously but much of that rate has been given back since 2022. When rates are coming down by 20% to 30% a year you need to be able to add new business, and so we have this phenomenal distribution network of producers. 

Q: Looking forward, where do you see opportunity for growth?

A: We’re four years into this business at CAC and we aren’t done building out those practices, so a lot of our growth is going to be from those very same practices. There’s lots more growth to be had in natural resources, particularly in the renewables field. Health care is a huge part of the economy in the U.S., and we’re at the early stages of our investment in health care. D&O is a product that most companies can’t live without, so we feel like more investment there is going to allow us to continue to grow. But we’ll continue to look at industries where we see non-commodity-like features. 

Q: You say all your growth so far has been organic. Will that change?

A: That could change. Our eyes are open to opportunities for tuck-in type investments. We can cross sell specialty products into (Cobbs Allen), and we feel that there are similar entities in other cities in the U.S. where this network that we built at CAC can be very valuable to them, so maybe getting more into the middle market in other cities is something that we’ll take a look at. Brokers that have heavy specialty lines investments or have specialty products, those are of great interest to us at this point in our existence. 

We’ve got a lot of dry powder, but organic is always going to be a big part of our story. 

Q: To do that often requires a fair amount of recruitment, which has its own challenges, particularly the litigation that often follows.

A: Recruiting people is not for the faint of heart. Our strategy when we do it is to abide by the agreements that people have. For some unknown reason, in our industry we have lots and lots of noncompetes and nonsolicits way above and beyond any other industry that I look at. I don’t think that’s great for buyers of insurance and I don’t think it’s great for professionals in the insurance field, but it’s an environment that we have to operate in, so we’ve got to be very careful. 

Q: In the past, you’ve suggested that maybe the way to go would be something like gardening leave like they have in the U.K. Do you see any prospect of that happening in the U.S.?

A: Every once in a while, you see it. Maybe because insurance is a much older, more established industry in the U.K., they got to a methodology that has a lot less litigation tied to it by forcing people to sit in the garden for six months or 12 months. I think it’s probably the most elegant solution I’ve seen thus far.