Entrepreneurial Insurance Symposium, September 1st, 2015“An Unusual Path to the C-Suite”

Entrepreneurial Insurance Symposium, September 1st, 2015“The Path to Insurance”

Start

Finish

Why the change in vocation?• Spent 13 years in Oil and Gas /

Construction– 6 years (total) in Home office– Brief stint in Papua New Guinea (Commercial

Project Oversight)

– 2 years in Ukraine (Commercial Site Manager)

– 2 years in Mexico (CFO and Commercial Site Manager)

– Brief stint in Norway (Commercial Project Manager)

– Next Stop ?

• Left Germany in 2002 to join

WKF&C Agency, Inc.– Family Reasons– Looking for a change in scenary– Felt the USA was a great place to start

something new– Had some good job offers......ultimately chose

WKF&C

2002 - 2015

Back then• 18 employees• Paper clogged the office• Sole location on LI• Microsoft Access was our

software• 4 products• Fax was our submission portal• No website• Manual Underwriting

Today...• 128 employees (23 at WKFC

China• Paperless• 7 Branches• Developed our IMS Software

• 15 products• Electronic data transfers• Interactive Website/Portal• Underwriting via U/W software

with webcalls to service providors

Entrepreneurial Insurance Symposium, September 1st, 2015“The Path to a New Beginning”

Our M&A Experience• Hardest part?

– Confidentiality– Letting go– New management / administration / red tape– Upholding the trust of the staff– Dealing with Client and Carrier concerns

• Mistakes?– Not letting an inner core into the „deal“– Not creating an LTI plan for senior staff– No RFP for our representation

• What would we do differently?– Consider an employee acquisition model – Allow for a reasonable timeline for DD. Pressure breeds mistakes

• Advice?– Don‘t wait for a life event to decide to perpetuate the business– Choose a broker wisely– Think long about informing your staff– Multiples are not the be all and end all– Educate yourself on all types of acquirors. They all have major pro‘s and con‘s and depending on

your business, some are and others are not suited– Understand the consequences of your choice and be very careful about messaging once the deal

closes– Don‘t be afraid to say „no“

M&A Distribution Evolution

M&A Brokers Bankers

Insurers

PE

Wholesalers

Retailers

Aggregators

Watch this space...

Announced Acquiree Acquiror Deal Value (est.)

Book valueMultiple

EBITDAMultiple

July 2015 Chubb Corp. ACE Ltd. $28.300.0 ? ?

June 2015 HCC Insurance Holdings Tokio Marine $7,501.8 1.90x 16.56x

May 2015 Ironshore Fosun Int. $2,098.0 1.45x 10.46x

March 2015 Montpelier Re Endurance Specialty $1,830.0 1.17x 7.37x

February 2015 Brit Fairfax $1,119.0 1.35x 8.10x

January 2015 PartnerRe Axis Capital $6,150.0 0.97x n.a.

January 2015 Catlin XL Group $4,078.0 1.27x 7.40x

Entrepreneurial Insurance Symposium, September 1st, 2015“The Path Forward”

Technology – Its place in Insurance

• Millenials are coming• Impossible to ignore or not only risk, but guarantee irrelevance• Automation is taking over wherever and whenever possible• Some recent poignant quotes

– The insurance industry will find itself in a "bleak scenario" if it fails to attract young talent to tackle the disruptive force of technology

– He highlighted that 25 percent of all people working in the insurance industry will be eligible to retire in just three years, meaning that in five years, around 400,000 job positions would be open in the US alone.

– "At the very least, we've done a terrible job in helping people to understand the value in what we do,"