Private equity firms are circling the insurance industry. One firm, behind a bold acquisition and organic growth strategy, aims to remain independent.
Trevor Baldwin’s phone rings regularly with someone dangling a lucrative opportunity: to buy Baldwin Krystyn Sherman Partners, the Tampa firm his dad, Lowry Baldwin, co-founded and where the younger Baldwin has been a partner since 2009.
“The insurance industry has been consolidating at a rapid rate,” says Baldwin. “There’s no shortage of folks who call on us.”
Usually from a private equity firm, Baldwin politely declines the offer.
But with mergers and acquisitions at a fever pitch — Marsh & McLennan recently bought Bouchard, a $42 million Clearwater insurance firm, to cite one example — a sale could make financial sense. A unit of Tampa-based insurance holding company Baldwin Risk Partners, Baldwin Krystyn Sherman Partners, or BKS, is on a tear: Revenue is up threefold since 2014, and rose 47.1% in 2018, from $24.2 million to $36.5 million.
The firm, handling everything from commercial insurance and risk management to employee benefits and benefits administration, has also dramatically increased its payroll and regional presence. It hired some 200 people in 2018, says Baldwin, and has already brought on another 40 people in 2019. It has multiple Florida offices, and other locations stretch from Alabama to Texas.
But BKS’s heft and strength, to Baldwin and other firm principals, is a reason to keep striving for more — not cash in.
“We are proud of the business we have built, and want to be sustainable,” says Baldwin. “We’re committed to long-term independence.”
That goal, says Baldwin, will require BKS, founded in 2006, to get even bigger and better. The firm began as a boutique risk management brokerage, when the elder Baldwin teamed up with Elizabeth Krystyn and Laura Sherman — all insurance veterans. Krystyn and Sherman both worked for Wachovia Insurance Services for a time. Krystyn handled large employee benefits clients, while Sherman worked on risk management for private collectors and museums, among other roles.
'We are proud of the business we have built, and want to be sustainable. We’re committed to long-term independence.' Trevor Baldwin, Baldwin Krystyn Sherman Partners
The latest step to add heft was big: BKS closed on a deal in March to buy Tampa-based Lykes Insurance. Founded in 1925, Lykes, under business conglomerate Lykes Bros., has some 60 employees and writes more than $125 million in annual premiums. With offices in Tampa, Fort Myers and Orlando, it handles commercial risk insurance, surety bonds and employee benefits. Terms of the acquisition weren’t disclosed.
In addition to the book of business, Baldwin says anther reason to do the deal is “there are a lot of similarities in the way they handle clients and in their service approach.”
BKS is doing more to remain an independent force in insurance, focusing on a array of middle market clients. One example is in technology, where, like many industries, data analytics is exceedingly important. BKS has five employees in its business innovation group, says Baldwin, with more to come. “I can’t imagine any competitor putting in the kind of investment like we have in technology,” he adds.
One final — and crucial — element to remaining independent, says Baldwin, is to maintain a rigorous hiring process. BKS targets a mix of collegial, yet competitive personnel, who thrive in an entrepreneurial environment. The company gives all candidates a psychological profile, and each prospective employee interviews with multiple BKS managers and leaders. Says Baldwin: “We are super intentional about who we bring on.”
The firm has an internal recruiting team that plays off BKS’s awards, growth and independent spirit. It works with colleges in the southeast, particularly Florida State and the Universality of Georgia, both with strong risk management majors. BKS also runs a large intern program, with 20 to 25 students a year.
“Our ability to maintain a competitive advantage is to hire the best and brightest people,” Baldwin says. “Our biggest challenge right now is to find those people.”