Mergers become part of fabric of insurance biz
Business First of Columbus - by Christine B. O'Malley Business First Correspondent
Mirroring the national insurance industry, Columbus brokerages are seeing mergers and divestitures on a regular basis.
Two recent developments illustrate the trend. On July 15, Anthem Insurance Companies completed its merger with Acordia. However, Anthem is expected to sell off portions of Acordia, including Columbus' Acordia/McElroy-Minister.
Acordia bought McElroy-Minister in December 1995. Anthem has said that it is in discussions with a "third-party financial buyer" regarding the brokerage operations of Acordia.
Bill Gillam, president and CEO of Acordia/McElroy-Minister, expects Anthem to make an announcement in August about a possible buyer for the insurance-brokerage business.
"Anthem has now completed stage one of the plan to divest itself of the brokerage, a part of the company which is the property, casualty, benefits consulting section of Acordia said Gillam. "They are now beginning to negotiate with interested buyers for that part of it." He added that the company already has an interested buyer, but hasn't released the name yet.
Gillam was surprised that 18 months after merging with Acordia the company was being sold.
"It was something we didn't expect so soon. We had only been with Acordia one year when this process was started. But on the other hand, one of the aspects we did care about was the fact that Anthem owned the majority of our stock, which made it a little difficult to convince your clients and markets that you were an independent broker," Gillam said.
Anthem is now only interested in certain operations functions of Acordia, such as claims paying, mailing services and support services, but not the brokerage aspects.
Jane Phillips, director of marketing and communications at Acordia/McElroy-Minister, said the brokerage will likely be sold as a whole and will provide the same services on a local level.
Phillips said the Columbus firm has expanded greatly over the last 18 months with Acordia. Annual revenues increased from $15 million to $30 million. Personnel grew from 220 employees to 408.
"We see that growth continuing and moving progressively," said Phillips.
The increase in personnel over the past 18 months was primarily due to the acquisition of smaller companies. In 1996, the firm's third-party administration and workers' compensation divisions merging with similar offices owned by Acordia and Anthem.
Another company with local offices was snapped up this year by professional services firm Marsh & McLennan. Johnson & Higgins of Ohio Inc. became J&H/Marsh & McLennan Inc. in March. The new entity focuses on directors and offices liability, employment practices liability, health care, employee benefits, construction and environmental impairment liability.
In 1995, Johnson and Higgins had a property and casualty premium volume of $34 million, according to Business First's 1996 list of independent insurance agencies. J&H/Marsh & McLennan had a premium volume of $80 million in 1996, according to the Business First list.
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