Kevin Bogart last year watched with keen interest when a publicly traded company in Florida bought a rival insurance brokerage he knew a lot about, Irvine’s Burnham Benefits Insurance Services LLC.
Bogart, who has built middle-market insurance brokerage Wood Gutmann and Bogart Insurance Brokers for the past 31 years, liked what he saw.
Hence, earlier this month, his Tustin-based company also sold itself to that same firm that bought Burnham, BRP Group Inc.
“We’ve been big admirers” of Burnham, said Bogart, who was the chief executive at WGB. “The more we learned about the deal, the more we loved it. We didn’t even meet” other potential acquirers.
The combination of the 130-person WGB with the 150-person operations of Burnham will catapult the combined company to about $75 million in annual revenue in Orange County, which would likely place it No. 3 on the Business Journal’s annual list of insurance brokers.
More importantly, the combined company will oversee the expansion of BRP’s operations on the West Coast.
“We have the ability to grow more easily, to add offices in different locations,” said Kristen Allison, who leads Burnham and is also BRP’s top executive on the West Coast.
Commercial Insurance Expertise
Tampa, Fla.-based BRP (Nasdaq: BRP) is an independent insurance distribution firm that represents over 700,000 clients across the United States and internationally.
The firm says its ambition is to be one of the 10 largest insurance brokers in the country within the next 10 years. Analysts are forecasting its sales to more than double this year to $550 million this year and then another 54% to $847 million in 2022.
BRP, an acronym for Baldwin Risk Partners, was co-founded in 2011 by Lowry Baldwin, who has founded prior brokerages and is now chairman; and his son, Trevor Baldwin, who took over as chief executive in 2019.
“This partnership with WGB represents a major milestone in adding critical commercial insurance expertise to our West Coast operations,” Trevor Baldwin said in a statement. “We believe that the combination of WGB’s commercial insurance expertise and Burnham’s employee benefits expertise will allow us to offer clients a truly comprehensive suite of solutions to meet all of their insurance needs.”
OC Buys Near $400M
BRP, which says the industry is fragmented, has been rolling up acquisitions, including 16 last year for $1 billion.
Its biggest acquisition last year was paying $230.2 million for Burnham, including $39.5 million in company stock, according to BRP’s annual report.
BRP bought WGB for $114 million in cash and possibly another $49.6 million in performance payouts, regulatory filings indicate.
BRP also gave WGB almost 900,000 Class A and B shares currently worth about $34 million.
The shares are a way to attract young talent, the executives said.
“Everyone is a shareholder, from the receptionist to the highest level,” Bogart said.
Wall Street likes BRP’s strategy.
Since going public in 2019 at $14 a share, BRP’s stock has more than doubled to almost $38 and a $4.3 billion market cap.
WGB provides risk management, commercial insurance and employee benefits insurance and consulting services, specialty insurance programs and private client solutions.
Burnham, meanwhile, consults clients on employee benefits, property and casualty, and retirement and wealth management solutions.
After the close, WGB’s current Commercial Insurance and Private Client Services practices will operate as Burnham WGB Insurance Solutions, and WGB’s smaller Employee Benefits practice has been tucked under the Burnham Benefits name.
The newly combined local company won’t be laying off any employees and is instead looking to add workers, the executives said.
“They’re acquiring best of breed that don’t need to be fixed,” Bogart said. “Trevor Baldwin said his objective is to build a forever business.”
“Our clients were so happy for us,” Allison said. “They love the idea of having their insurance, brokerage and consulting all in one place.”
“We’ve had so many cultural similarities that it was a natural feel,” Bogart added. “One of the great things is we bring together the best of both worlds.”