Novatae targets $2 billion in premium – CEO
“I will try and take this from $800 million in premium to $2 billion in the next two and a half to three years,” said Richard Kerr (pictured), Novatae CEO.
“That will be done largely through acquisitions of other MGAs and specialty companies and the hiring of teams of underwriters around which we can build specialty programs.”
Why Novatae deal was a “better way to go” for MarketScout
Kerr joined Novatae on the business’s November purchase of MarketScout, a firm he founded in 2000.
When the possibility of a deal with WIA came up, MarketScout was already “well down the way” on initiating an acquisition program of its own to grow its brand, with $350 million of private equity backing committed, according to the CEO.
“When I did have someone make the courtesy of an introduction to [WIA], and saw what the vision and planning was, I made the decision that that would be a better way to go, because I could take the reins as CEO, take the acquisitions that they had made, continue to grow, and grow it beyond where it is today,” Kerr said.
WIA was looking for a “landmark acquisition to be the lynchpin and keystone”, Kerr said, and MarketScout fit the bill.
Bedding in the businesses
Now around 90 days with Novatae, Kerr said his time has “largely” been spent on consolidating the 11 businesses.
“It’s a continuing process, we’re getting better and better every day,” Kerr said.
“It’s taken me a while to find out where all the talent lands, and so now our next step will be putting the face of that talent forward to the retail community so that they know how to best access it.”
The group includes Scottish American, a wholesale broker known for having an unusual culture – for example, historically staff have been able to pick their own titles, and these have ranged from the unremarkable (for example, producer) to the eye-catching ‘master of coin’ or ‘claims-jedi’ –
and flat structure that its chief everything officer, Danny Ginden, described as “meritocratic” in conversation with Insurance Business last October.
With culture, as with other business elements, Novatae is taking a “blending” approach to what works and what doesn’t, and Kerr said it is aiming to “take the best of what each [business] has to offer”
“There’s a tremendous amount of talent inside [Scottish American] and, as we move forward, what we are going to try and do is take the best of the culture of each and every acquisition and blend it together,” Kerr said.
“Obviously, it’ll change for everyone; it’s going to change for MarketScout, it’ll change for Scottish American, it’ll change for Keating.”
Targeting growth through digital, data, and the human touch
Every acquisition brings something “unique to the table”, Kerr said. In MarketScout’s case, this is distribution technology built over 20 years and relationships with more than 20,000 retail agents.
The overall game plan is to use data and analytics and couple this with a “human expertise” element.
“We were doing big data before it was even cool,” Kerr said.
“The ability to reach out and know where [for example] every red roof barn is in America is worth a lot, and we’ll be using that to the advantage of our systems and the advantage of our retail agent partners.”
MarketScout’s exchange will act as an entry point for retail agents, Kerr said, with specialisms compiled into verticals on the platform.
We’re “not going to fake it”, says Novatae CEO
While the MGA and wholesale broking business has multi-billion-dollar premium ambitions, it will not be looking to grow in areas it cannot compete in, according to Kerr.
“You have some incredible competitors out there, and they’re all very good, so we’re going to pick those specialty areas where we can be the best of the best and put forth those and try and capitalize upon them,” Kerr said.
“If we’re not good at shipbuilding, we’re not going to fake it and try and do shipbuilding; we’re going to be very straightforward with the retail community and tell them exactly what we’re good at and we’re going to try and be the very best at that.
“We are not going to go out and say there’s nothing we can’t do, just send it to us and we’ll try and cobble it together – if we don’t do shipbuilding, we’re just going to tell you, and as a matter of fact, we will probably then connect you with one of our friendly competitors that is great at shipbuilding, because at the end of the day when you walk through that door, our job is to find you a solution, even if it’s not within one of our companies.”
