Blog Entries for Clear Rock

Gallagher Announces Acquisition of Fidelity Benefits

clearrock — Sun, 15 Feb 2009 22:00:00 +0100

Arthur J. Gallagher recently announced the acquisition of Fidelity Benefits & Insurance Services of Waco, Texas.

The transaction continues the trend of Benefits transactions outpacing those on the P&C side, as well as the pace of consolidation in the Texas marketplace.

Texas Agency Powter Acquires O'neal

clearrock — Sun, 15 Feb 2009 22:00:00 +0100

Powter Insurance, a north Texas P&C agency, recently announced the acquisition of O'neal Insurance. O'neal is a P&C and benefits agency also located in north Texas.

Gallagher Acquires PartnerSource

clearrock — Sun, 15 Feb 2009 22:00:00 +0100

Arthur J. Gallagher announced that they have acquired PartnerSource, Inc.- a Texas based broker.

Notable in the transaction is Gallagher once again buying into niche segments- PartnerSource is benefits agency with a particular focus on non-subscription programs.

We continue to see benefits agencies get attention in the current M&A environment, with "nichey" specialty companies attractive as differentiators to acquirers. While market share is nice, [...]

The Changing Face of Insurance M&A

clearrock — Wed, 11 Feb 2009 22:00:00 +0100

Now that we are clearly in the midst of a recession - no matter what metric you use or person you ask - the common theme of questioning has predictably drifted from “what will happen” towards “how far will it go” and “how long will it last.”

Clearly the broader economic environment is going to have an impact on the insurance world- and hence insurance M&A. From an economic standpoint, we believe that those two questions go a long way to sh [...]

Winter Insurance Newsletter Published

clearrock — Mon, 09 Feb 2009 22:00:00 +0100

Clear Rock's Winter Insurance M&A newsletter is now available for download.

Inside we touch on a number of subjects, to include:

Changing Face of Agency M&A's
Where have bank buyers gone?
Big AJR, USI deals

Download the Insurance M&A Newsletter

Writedowns... Explained

clearrock — Mon, 09 Feb 2009 22:00:00 +0100

One can't go an hour or two during this earnings season without hearing about yet another large write-down from a public company. On the private side, though, most smaller companies rarely take write downs- so we thought the concept might bear some explanation:

Benefits Agencies: Why They�re Hot

clearrock — Wed, 04 Feb 2009 22:00:00 +0100

The numbers from 2008 clearly bear out the trend: benefits agencies are moving at a faster rate than traditional P&C shops.

While the reasons are manifold, one key factor is the availability of solid agencies for traditional P&C buyers. After a several-years long buying spree, many of the best shops have been absorbed by banks and public brokers.

When combined with the soft P&C market, we see a gravitation towards the benefits side. The need to div [...]

Blockbuster Deals for AJR, USI

clearrock — Mon, 02 Feb 2009 22:00:00 +0100

Many thought that Arthur J. Gallagher and USI had been unusually quiet in during the end of 2008- but apparently they were both busy wrapping up a blockbuster deal with Liberty Mutual.

Both companies acquired the renewal rights and certain employees from Liberty’s middle market P&C group.

Interesting, here, is Liberty shedding their captive distribution channel. While they open themselves up to some competition, it stands to reason they get a broader [...]

Toxic Assets... Effecting More Than Just Wall Street

clearrock — Thu, 22 Jan 2009 22:00:00 +0100

As we head into earnings season (and into a new administration) we arebound to hear more and more about "toxic assets" and how they are impairing recovery for banks - and the economy as a whole.

Here is a little more on just what "toxic assets" means:

Current Insurance M&A Valuations

clearrock — Thu, 04 Dec 2008 22:00:00 +0100

We just wanted to provide a current glimpse at the insurance broker / agency M&A market. It's a question that we get asked time and again: what types of valuations are people paying?

Our experience is that, even in the current market, deal multiples have not suffered significantly. We have a series of transactions priced between 1.5x to 2.0x commissions. From an EBITDA perspective, valuations are still pricing at 6x EBITDA and above. And again, these are deals closing in Dece [...]

Deal By Christmas

clearrock — Sat, 08 Nov 2008 22:00:00 +0100

Clear Rock has several buyers that are seeking to squeeze in a deal to buy an insurance agency before the Holidays.

Now that the election is over, and it seems more likely that capital gains taxes will rise in the next year, it is a great time to take advantage of not only getting a deal done, but also allocating a portion of the price at the historically low 15% long term capital gains rate.

As you can imagine, the timeline is getting tight. If you are in [...]

More AIG Troubles

clearrock — Wed, 08 Oct 2008 22:00:00 +0100

Last night the Fed announced another $38bn infusion into AIG. Curious, of course, is how they decided to word the transaction: the Fed is "borrowing" certain assets in return for "cash collateral." While a cash collateral is a perfectly legitimate transaction structure, we believe that this is just a cumbersome attempt to obscure a second recapitalization of AIG in under 2 weeks.

Granted, since the Fed effectively owns AIG at this point, we imagine its within the [...]

More Trouble for AIG? (Already?)

clearrock — Sun, 05 Oct 2008 19:00:00 +0100

In yet another scary missive about the state of AIG, the New York Times writes today that AIG had already drawn down $61b of their newly minted $85b line of credit. In concert, S&P has issued yet another warning on AIG.

All this calls into question whether the Fed's emergency intervention with AIG will be the end of the bail-out, or rather somewhere around half-time.

Of interest for Agencies, of course, is how AIG has put this capital to use- namely "shoring up their [...]

CHG Healthcare Acquires AHR Pharmacy Solutions

clearrock — Sat, 27 Sep 2008 22:00:00 +0100

CHG Healthcare, one of the oldest and largest healthcare staffing firms in the United States, announced in late September it has acquired AHR Pharmacy Solutions. Terms of the deal were not disclosed.

Deal Motivations: Defensible Market Niche

Although CHG is already regarded as one of the top healthcare staffing firms in the United States, they are always looking for ways to capture more customers. With the acquisition of AHR, CHG will be able to diversify their services to include re [...]

Taleo and HRhome Merge

clearrock — Sat, 27 Sep 2008 22:00:00 +0100

Taleo, a leading on demand recruiting company for small to medium sized businesses announced in late September it merged with HRhome, an online resource center for HR professionals. Terms of the deal were not disclosed.

What Were They Thinking?
• Increased service offerings

• Wide customer base

HRhome, a provider of tools and processes to ensure employees are hired and managed correctly will now be joined by Taleo who combines state of the art [...]

Clear Rock's Brian Burke Hosting Conference Call Today

clearrock — Tue, 16 Sep 2008 22:00:00 +0100

Brian Burke will be hosting a conference call today at 2 p.m. to discuss the AIG situation and how it is likely to impact agency owners.

Conference Dial-in Number: (269) 320-8100
Access Code: 524868#

How can the Fed Offer a Bridge Loan?

clearrock — Mon, 15 Sep 2008 22:00:00 +0100

Didn't think that the Fed could simply starting making loans, did you? Neither did we.

Fortunately we were not the only ones curious - hence we didn't have to look to far. Apparently the Federal Reserve Act of 1933 (Section 13(3) to be precise) allows the Fed to make direct loans under "exigent circumstances."

Seems that this week's developments could fall under the rubric of "exigent."

Bridge Loan is In

clearrock — Mon, 15 Sep 2008 22:00:00 +0100

Fed is offering a $85b (yes billion) bridge loan to AIG. In return, AIG will give up some 75% of equity.

What is a Conservatorship?

clearrock — Mon, 15 Sep 2008 22:00:00 +0100

For all the Agency and Company readers- you may not have read the fine print on the conservatorship from the Frannie and Feddie debacle last week. Afterall, its not that often that we get talking about these things.

So what is it? Essentially, it is a mechanism for the gorvernment to take control of an organization with the intent of continuing the run it - often times in preparation for a sale. This contrasts to a receivorship, which is when the appointed entity is conducting an o [...]

Conservatorship and Bridge Loan

clearrock — Mon, 15 Sep 2008 22:00:00 +0100

Some details are emerging here - sounds like AIG will be placed into a conservatorship in return for a massive bridge loan. AIG has continued to reiterate that they are well collaterlized, but as issue is liquid capital to meet requirements. The bridge loan will enable to AIG to conduct an orderly liquidation to meet capital requirements.

We'll point out, though, that this loan will essentially wipe out all shareholders - not sure of the details yet, but likely that the gov't will [...]