Risk management and broking firm Risk Strategies has been on the acquisition trail this year, growing its business through several deals. Its latest move saw it purchase Oxford Risk Management Group, an alternative risk, captive insurance and consulting firm, for an undisclosed sum.
Corporate Risk and Insurance spoke to Risk Strategies’ CEO Mike Christian to find out more about the deal, and the big risks facing companies.
Christian, who founded the company in 1997, has more than 30 years industry experience having worked for firms including Alexander & Alexander and then-Jardine Insurance Brokers.
What are the main risks that you are talking about with clients today?
As far as risks that are emerging, and while this isn’t ground breaking, I think cyber is really at the forefront of a lot of firms’ minds. It’s a coverage that is widely available, frankly, but it’s an exposure that keeps evolving and changing, and it’s scary for firms. Virtually every larger firm has had a cyber event of some kind, and so there is a lot of interest in that and we continue to have conversations with our clients about cyber.
Climate change is also an issue – I see that in so many different places. Whatever the reasons for it, I think we all can agree that the weather in recent years, particularly with violent storms and flooding, has become more of an issue, and I think that’s going to be with us for a while.
On the risk management side, we are seeing more and more requests, particularly from larger companies, for assistance in that area – either on the claims or advocacy side, or just the overall risk management, loss control and safety aspect. There’s a need from the buyer to try to mitigate the overall cost of risk, through not just buying insurance, but also applying risk management techniques.
Why was Oxford Risk Management an attractive purchase?
Captives and alternative risk financing are my particular personal specialty and my clients fall into that area. I’ve always had an interest in captives – I think it’s a unique way to finance risk. It’s not for everybody of course, but where appropriate it is a very strong way to finance risk and to look at managing a client’s overall cost of risk over a long-term period.
We already had a segment of business that utilised captives, but it wasn’t nearly as large or as distinct as Oxford. It’s a good size business which is one of our largest acquisitions ever. They are very well-run, very focused on organic growth, and very client oriented. It fits from both a cultural and a growth standpoint into Risk Strategies.
What is Risk Strategies’ approach when it comes to acquisitions?
We’ve been in existence for the last 20 years and have been very active over the last five years in M&A. Our strategy is really specialty-focused. We would describe ourselves as a specialty insurance brokerage firm, and I think we were evolving into that over the many years that we were growing organically, but really within the last three to four years we’ve started to articulate ourselves as a speciality insurance broker.
Our strategy for making acquisitions is driven by the specialties – employee benefits in the US is a big part of our business, as is private client personal lines. So, naturally, many of our acquisitions, especially in the last couple of years, have been in those distinct two areas. On the commercial P&C side of the business, we have probably 10-12 practices or speciality areas, and our acquisitions on the P&C side have been guided by those. Our most recent acquisition, Oxford Risk Management really brings some very distinct speciality in the captive insurance area.
Are you looking to do more acquisitions, and what do you look for in a potential target?
We are definitely looking at more acquisitions. It’s a time of consolidation – there are many firms like us that are private equity backed and are taking advantage of a certain set of circumstances that exist in the market today. It won’t last forever, but we are fortunate to have a financial sponsor to help us.
Our strategy will remain focused on specialty firms, but culture is also very important for us, particularly as we are growing so fast. We try really hard to qualify the culture and the approach of any firm that joins us, that’s probably the most important thing – is there a similarity in culture, and is there a speciality that would enhance an existing speciality for us or add a new one? That’s our strategy into the future.
Will we see any more deals this year?
This year will turn out to be, and I believe already is, our strongest year ever from an M&A standpoint. We do have several other firms in the pipeline that we hope to close by the end of the year.