By James Thaler

March 4 - (The Insurer) - Dave Obenauer, the CEO of newly established “pure-play” wholesaler CRC Group, has said the company is strongly positioned to compete against rival firms who have been independent for years.

Obenauer made those comments in an interview with E&S Insurer after CRC announced its intention to “sunset” the TIH brand, with CRC Group now being structured as two divisions: specialty and benefits, and underwriting.

The company said the move reinforces its position as a “pure-play, independent wholesale and underwriting industry leader”.

In the interview Obenauer acknowledged the significant undertaking involved in the firm’s move to establish its independence when it was spun off from Truist Financial in May.

Those steps included the establishment of full operational separation in areas such as setting up a general ledger and independent HR systems.

The company also spun off retail sister company McGriff Insurance Services to Marsh, which Obenauer described as a “good outcome” for both McGriff and Marsh, as well as for CRC, since it established the firm as a pure-play wholesaler.

Among the advantages of now operating as a stand-alone firm with private equity backing are being able to incentivise staff by making them shareholders in the business.

Obenauer said that offering equity to staff had been more difficult in the past under bank ownership, which he acknowledged is something CRC’s peer firms have been able to do for a long time.

“So we start this year with a lot of momentum, a lot of excitement across our business in terms of the future,” Obenauer commented.

“Folks have seen great success from our peers the last many years, now it's our turn to drive some really neat results for our clients, our carrier partners and our equity ownership. So, we're in a good spot,” he added.

Obenauer highlighted the firm’s renewed focus on both organic growth through new staff hires and product launches, as well as inorganic opportunities. He acknowledged that CRC had been a “sporadic” acquirer in recent years.

“It is now definitely a great opportunity for us to partner with the right firms,” he said, saying that CRC now has “an awful lot of support with our sponsors and capital to do that”.

This publication revealed last month that CRC is in talks with Stone Point stablemate ARC Excess & Surplus to acquire the smaller wholesaler.

Asked about CRC’s priorities over the next 18 months, Obenauer put organic growth at the top of the list, which will include bringing aboard both underwriting and production broker talent.

The firm’s second priority Obenauer listed is “margin enhancement”, which he said would be achieved in part by introducing more automation and the increasing use of artificial intelligence, something he said was harder to do under bank ownership.

Third on the list, he said, would be M&A.

“We definitely intend to be a player in that space, and we've got a pretty significant warchest to do that kind of stuff. So that's on the list in terms of the wholesale business and the programs MGA business.”

He also pointed to further build-out of proprietary capabilities and products within its wholesale broking and MGA arms as another major area of priority. Obenauer said CRC would accomplish this through both acquisitions and de novo launches.

“There are certainly some businesses out there we may like to partner with. And now that we're beyond all the change from last year, we're ready to approach that marketplace.

“But de novo certainly is [an option] too. We've done a few of those in the last few months as well. So I'd say both, and we'll be competitive where it makes sense and where we want to do a deal,” he commented.

He also said that with independence, CRC now expects to be on stronger competitive footing with its main wholesale rivals, Amwins and RT Specialty.

“I think so, yes, for sure. That is our mandate and expectation,” Obenauer said.

CRC is also in the early stages of its holding period with its new PE backers, though there is an expectation that the business is ultimately being positioned to one day be listed as a publicly traded company.

“It's certainly a potential, and we've thought about that as a potential. But it's not the only scenario,” Obenauer commented.

“Our focus right now, especially early in the hold period is all the other stuff we've been talking about, which is driving growth and value, and at that point, based upon doing a good job there, I firmly believe our ownership structure will take care of itself, whether it's public or private.”

E&S TAILWIND

Obenauer also described continued strong market conditions across the E&S landscape as “a tailwind”.

“I think the E&S market will continue to expand faster than the overall market as it has now for a bunch of years,” he said, noting that the flood of business into the channel continues to be driven by rising risk levels.

The E&S channel, he said, has also benefited from the fact that many carriers now write business on both an admitted and non-admitted basis.

“It's more about which channel makes more sense for them and from a complex risk perspective; oftentimes obviously E&S is the better channel from which to sell a product,” he commented.

“I think E&S will continue to grow, there'll be pricing cycles. Property will be soft this year off of, quite frankly, all-time highs, so still pretty attractive. Casualty is firming and has its own challenge of driving that cycle,” he added.

“We're used to cycles and underlying all that is driving growth for the specialty channel, which I'm super happy where we are today, being pure-play to keep driving that,” he continued.

Obenauer also commented on the growing trend of major consolidation among retailers, which he said has shown that “scale is really important” in both retail and wholesale.

“And for us, that's good. We have strong relationships with acquiring firms and that gives us more opportunity as we scale,” he explained.

On CRC’s rebrand, Obenauer pointed to the firm’s new tagline: “Move Faster. Go Further”.

“That's our messaging, and we're excited about it. And it's been a long time coming,” he concluded.