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Sunday, May 28, 2023

Company Spreads Risk Across the Globe

Andy Thorburn thinks of himself as a risk taker.

His career certainly has exemplified it, from teaching in riot-torn Newark, N.J., to spending a month in jail, to building a wildly successful career in insurance, to losing his fortune on bagel and muffin restaurant franchises.

“Sometimes, I ran off the cliff, not intentionally,” he said. “I’m definitely a risk taker. I’m unusual in the fact that I’m not stressed out by risk.”

Nowadays, it seems appropriate that his company, Global Benefits Group, assesses the risk of insuring people in some of the world’s most unstable countries, like Venezuela and Angola.

GBG, whose administrative offices are in Foothill Ranch, employs 300 in a dozen offices around the world. The company provides health, life and other insurance products to more than 150,000 expatriates, foreign students, embassy employees and high-net-worth people living in emerging countries.

Thorburn made his most recent gamble in February when he took the company public under the ticker GBGI on the London Stock Exchange, where last week it had a market capitalization of 123 million pounds, or $158 million. It ranks 53rd on the Business Journal’s list of the largest Orange County-based public companies.

“GBG is an established profitable business, has a generous dividend policy and comes with an exciting growth profile,” said the May issue of Growth Company, a U.K.-based magazine that tracks fast-growing companies on the London Exchange. “If it delivers on forecasts and builds a track record as a public company, it should generate some strong returns from its current valuation levels.”

The company has also received a vote of confidence from AXA, the world’s second largest insurance company by revenue and with 103 million customers. AXA in October entered into a strategic partnership with GBG and is now the principal reinsurer, meaning it will take a portion of the risk of GBG’s policies.

Jail Time

Thorburn’s risk-taking career began in the late 1960s as an English teacher at a high school in Newark, where the New York native became a union leader and was sentenced to 30 days in jail for defying a judge’s order not to strike.

Like many teachers, Thorburn took a part-time job on the side. Upon the advice of a salesman then based in the area named Robert Sass, Thorburn earned a license to sell insurance and began selling plans to his fellow teachers. He sold so many that in his late 20s, Thorburn dropped teaching to set up his own agency and became well-versed in annuities and pensions.

He sold the firm to what became the Copeland Companies, where he worked as senior marketing officer; Copeland was acquired by the Travelers Insurance Co.

The sale of two companies made him feel rich enough to retire in his early 40s. But like most entrepreneurs, he grew restless, so he began a bagel and muffin restaurant franchiser to capitalize on the growing health food movement.

The company went public with a market capitalization he estimates reached as high as $50 million.

“Muffins seemed like the next best things after doughnuts,” he said. “They were all good ideas, but sometimes not all good ideas work out.”

New Start

The franchiser went bankrupt, and Thorburn was looking for work when Sass again approached him to take a marketing job at his firm in Foothill Ranch.

Sass founded his firm in 1981 to provide financial advice to expatriates, and it evolved into an international insurance business under the name GBG for Global Benefits Group.

GBG was writing about $10 million in annual premiums when Thorburn arrived in 1999. He eventually became president, then CEO, and bought a majority stake when Sass retired in 2005. Sass still owns about 7.7%.

GBG designs insurance products and makes alliances with local insurance companies in target countries to sell the products. Last month, for example, it announced a partnership with a company in the country of Georgia to target Eastern European nations.

“Our big advantage is customization,” he said. “We try to convince them that we are the best.”

It’s incorporated on the Channel Island of Guernsey, where it’s easier to write insurance policies than if its headquarters were in California because the insurance laws are more flexible than in the U.S.

Growth came fast this decade as annual sales doubled in a two-year period to $108.2 million last June. Revenue climbed 22% to $62.1 million in the six months ended Dec. 31. It wrote $106 million in premiums during the first half of its fiscal year and projects that it will top $200 million for the full year, which ends June 30.

Rated Good

The growth caught the attention of A.M. Best Company, considered the gold standard in insurance ratings. Last year it rated GBG’s financial strength at B++, with a negative outlook because of an increase in leverage. The rating is assigned to a company with a good ability to meet its obligations, A.M. Best said.

“GBG’s stand-alone operating performance is solid, as demonstrated by … a return on equity of 22.6%” from 2011 to 2015, the report said.

A.M. Best is updating its report within the next month, and Thorburn hopes the negative outlook will be removed because of the capital raised in London.

GBG chose the London Stock Exchange because it’s the center of the international insurance industry and has a good platform for small companies. The company went public in February at 150 pence per share and traded at 144 pence a share as of May 3. The IPO netted 29 million pounds, or $37 million.


Thorburn owns 30% of the company’s shares, followed by 29% held by Bison Capital Equity Partners, a middle-market investor with offices in Santa Monica and New York.

The executive, 73, decided to give up the CEO role because investors want to see younger executives at the helm, instead taking the title of director of strategic planning. In 2015, GBG hired Robert Dubrish, 65, who has 35 years of experience in the financial services sector, including as president of the wholesale division of New Penn Financial of Shellpoint Partners LLC, senior vice president at loanDepot LLC, and founder and director of Option One Mortgage Corp., which became one of the largest nonbank mortgage companies in the U.S.

However, Dubrish had an “unplanned cardiac surgery,” the company announced in a press release in February, and shares fell 4.5%. He’s now back at work and almost fully recovered, Thorburn said.

6% Dividend Yield

Since the company doesn’t sell its products in the U.S., it has kept a low profile. That’s changed, now that it’s publicly traded. Thorburn pointed out that the company plans to pay an annual dividend that could yield 6% this year based on the company’s share price at the end of the fiscal year in June.

The company has pulled back somewhat from Africa after oil sales fell and focused instead on Latin America. Thorburn said he sees tremendous growth potential in Brazil, Venezuela and other countries there. The company is launching an effort in China and entering new markets, such as insurance for foreign students who study in the U.S. and services like medical referral for foreigners.

The lanky, 6-foot-1-inch Thorburn, who still plays pickup basketball games, said he intends to stay in Southern California because he loves “the weather and lack of mosquitoes.”

He remains a risk taker, though. His goal for the company is to double premiums to more than $500 million in three to five years.

“The insurance business can be very profitable if you do it right,” he said. “We have a very good underwriting record.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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