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Finance: Mordy Rothberg

Confie Seguros Insurance Services is getting big with a lot of small moves.

The Huntington Beach-based insurance brokerage firm, which specializes in serving the fast-growing Latino-American population, has been growing at an accelerated pace, thanks in part to active acquisitions of smaller auto-insurance brokerages across the country.

Acquisitions

Consider Confie’s beginnings in early 2008, when it launched with $75 million in private equity backing. It made nearly 40 acquisitions over its first five years in business, growing to about $200 million in revenue and 300 storefront offices in nine states by the end of 2012.

The firm rode the momentum to another 40 or so acquisitions in 2013 and 2014. It now has about $350 million in annual revenue and 560 locations in 17 states. Another 45 acquisitions are in line for 2015, said President Mordy Rothberg.

The cofounder, who’s helped lead Confie’s expansion along the way, said key elements in the company’s growth have been its talent and increasing scale.

“The management team we have today is the best I’ve been associated with,” he said. “And we have scale, which is really important. We’re builders of companies. … Some people think that you do an acquisition and cut out a lot of costs, but we’re all about growing. Cutting costs helps you to a certain extent, but we’re investing in capital expenditure and in technology, which is extremely important. We’re consolidating and growing, so our ‘one plus one’ becomes three.”

Rothberg said he expects Confie to double its revenue to $700 million in the next five years and to have more than 2,000 locations through acquisitions and store openings. It opened 40 offices this year.

Confie operates various brands in different regions throughout the U.S. It’s known, for instance, as Freeway Insurance in California, Driver’s Choice in Texas, and Vern Fonk in Washington.

Opportunities

The insurance brokerage industry’s fragmented nature is providing opportunities for Confie, Rothberg said, adding that the industry has many mom-and-pop stores and is ripe for consolidation, especially when considering the Latino-American consumer base.

“You’re dealing with the fastest-growing segment of the population,” said Rothberg, who became familiar with the ethnic community when he ventured into the brokerage industry in 2006.

“I realized that the Hispanic consumer wasn’t buying [insurance] on the phone, wasn’t buying on the Web; it was face-to-face,” he said. “I was very familiar with the Hispanic customer base and understood the opportunity that this segment of the population offered.”

In 2007, Rothberg met Joe Waked, who at the time was running Westline Corp., a Cypress-based brokerage. The duo, along with John Addeo, who had retired after a 30-year career in the brokerage industry, started Confie through the acquisition of Westline with funding from San Francisco-based Genstar Capital LLC. Waked became chief executive of Confie through the transaction.

Genstar sold its stake in Confie in late 2012 to ABRY Partners, a Boston-based private equity firm.

Waked recently stepped down from the chief executive post and was succeeded by Valeria Rico, who previously served as chief strategy officer and chief operating officer. Waked, a former attorney, now serves as chairman.

Rothberg has a background in telecommunications and business development. He held executive roles at Newark, N.J.-based IDT Corp. and was a principal of Net2Phone, which spun off from IDT. He helped Net2Phone draw investments from Softbank, NBC and AT&T, among other backers.

Expanded Focus

Rothberg said Confie’s focus has expanded over the years to include a wider range of “mid-America,” in addition to the Hispanic audience.

“We’re expanding and not just focusing on the Latino community,” he said. “People ask if we are abandoning that strategy. No, we still think it’s our focus. But our niche is not necessarily just the Hispanic community, but it’s really what you call mid-America. Our customer would typically make $30,000 to $65,000 a year.”

Healthcare Insurance

Next in line is an entry into the healthcare insurance arena.

Freeway Insurance and Anthem Blue Cross recently forged a partnership to provide Latino consumers in California with increased access to bilingual healthcare insurance enrollment agents.

Confie’s Rico said in a statement that “there is an essential need to connect our customers to vital” healthcare services and that Confie is working to “bridge the gap” to make affordable healthcare available to the Hispanic communities.

The healthcare area is “a tremendous opportunity,” Rothberg said. “A lot has changed with the Affordable Care Act. Healthcare used to be business-to-business, but now it’s business-to-consumer. People used to get it from employers. But healthcare insurance is confusing. You need someone who’s a trusted adviser, who can hand-hold the customer through that process and educate. That’s what we do today with auto insurance. Healthcare is the next step.”

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