Amwins CEO: retail consolidation is a positive as dedicated wholesalers continue to deliver value

May 27 - (The Insurer) - Amwins CEO Scott Purviance has said the wave of large-scale M&A in the retail broking space will help deliver better overall solutions to clients, and joined other leaders in highlighting the value that dedicated wholesalers and the E&S market continue to bring to the P&C insurance sector.

Participants on last month’s “A market in uncharted territory” webinar hosted by E&S Insurer were asked about the impact of retail consolidation on the wholesale broking and surplus lines sector.

Purviance noted that 2024 represented a major year for large-scale retail broker M&A, as deals for Aon to buy NFP and Marsh to buy McGriff closed, and AJ Gallagher’s pending acquisition of AssuredPartners was announced.

In total, he said that around $6.5 billion of aggregate revenue was acquired last year, in stark contrast to the previous five years, when the biggest annual total was $800 million in aggregate revenue.

“Our view on retail consolidation has always been that it’s a good thing. Having more scale allows (carriers) to invest (and) deliver better overall solutions for their clients. So we’ve never been somebody that is worried about consolidation and fewer and fewer retailers,” he commented.

The executive noted that there continues to be a repopulation, with the overall number of retail agencies not shrinking as significantly as the number that have been acquired.

“But having the scale to invest and deliver for your clients is important, so we’re very supportive of our retail clients as they grow,” he said.

Another phenomenon reported on by this publication in the last few years has been the emergence of wholesale brokerage strategies at global brokers, including Marsh, with its Victor Access platform, as well as the wholesale platforms that many of the next tier of intermediaries have built organically and through acquisition.

Purviance said the evolution of retailers and their wholesale platforms has not led Amwins to adjust its strategy at all.

“We’re very comfortable with where we sit in the value chain, and the value we bring to the table… the talent we bring to the table and the technology.

“At the end of the day, as a large retailer, if you look at capital allocation and where you put that investment, you’re almost always going to gravitate to your core business, delivering for your clients and investing in that retail capability,” he commented.

He added that as a dedicated wholesaler, Amwins doesn’t have that conflict and has built tools and talent specifically to serve its retail clients.

“We’re just going to have a different level of ability to focus on building wholesale capabilities, in my mind, than the vast majority of retailers who actually have great businesses on the retail side that they need to build and grow,” he concluded.

Purviance was joined on the panel by Zurich North America’s head of E&S Christopher Lewis and Axa XL’s head of wholesale solutions Tim Whisler.

CARRIER WHOLESALE FOCUS

Whisler recently moved from Lexington’s Western World platform to spearhead the build-out of a distinct E&S offering within Axa XL.

And he pointed to the value wholesalers bring as a key driver of the rise in prominence of the E&S sector in recent years.

“One of the reasons I’m here, and core to my vision, is unwavering dedication to the wholesale channel, and that’s solely where we’re focused, from a distribution standpoint.

“The success of the E&S market isn’t just the fact that the world has become a riskier place. That’s part of it, but I think it’s also the value that the wholesalers have added in the chain. They provide efficiency, market access, expertise [and] I only see that going forward as being amplified and more important,” he suggested.

He said that newer entrants in the wholesale broking space would have to prove they can add value and attract the best talent.

Lewis said that when his company partners with its wholesalers it is focused on quality and value add, with a relatively small set of partners it works with, with both sides “trying to prove ourselves in how we add value”.

“That works really well, because we end up working together strategically and identifying areas for us to grow. There’s an entry cost for someone to break into that, and they would really have to demonstrate that they’re bringing a capability that would make sense for us from a strategic perspective,” he added, stating that Zurich North America’s alignment with the wholesalers it currently works with is strong.

WHOLESALE M&A FOCUS ON MGA SEGMENT

In contrast with the retail brokerage sector, the bulk of consolidation has already taken place in the transactional wholesale space.

This means the focus of the major intermediaries in the sector has been on M&A in the delegated authority space.

Purviance commented: “There are a number of smaller transactional and regional transactional wholesalers out there, but for the vast majority of the M&A in our sector, the focus is going to be on acquiring MGA niche program talent.”

He added that Amwins has been building its specialty benefits business, adding two significant acquisitions int eh last two quarters as it looks to deliver capabilities to its retail clients.

“I think it’s going to be more around underwriting capabilities,” said the executive.