Risk management firm and insurance broker Risk Strategies is on a roll, having acquired four employee benefits companies this year – the latest being Arkin Youngentob Associates, based in Bethesda, Maryland.
John Greenbaum (pictured), national practice leader for employee benefits at Risk Strategies, provided details on the transaction and the circumstances surrounding it.
According to Greenbaum, the Arkin Youngentob acquisition came about partly due to Risk Strategies’ reputation for deals in the industry.
“As a known acquirer, financial intermediaries present us with hundreds of acquisition opportunities each year,” he told Corporate Risk and Insurance. “Risk Strategies is focused on building the leading specialty brokerage in the US. Our property and casualty business is organized around industry specialization – we view employee benefits as a complementary specialty. When we saw the initial information on Arkin Youngentob, we were immediately interested. When we met Stuart Youngentob and his partner Josh Jeffries, we were sure it was a fit.”
Greenbaum then elaborated on an earlier comment on the acquisition, which he said came amid the “dysfunction and expense of today’s healthcare environment.”
“The US healthcare delivery system is a mess,” he said. “We spend nearly 20% of GDP on healthcare – far more than any other country – and our results are far from the best. The ever-escalating cost of healthcare is a challenge for many patients and their employers and is ultimately a drag on the economy.”
To remedy this, Greenbaum said that Risk Strategies will work closely with its clients to identify the physical and economic risks to their businesses. This holds true for both their property and casualty and healthcare businesses.
“For many clients our approach involves the deconstruction of the traditional employer sponsored plan model,” he said. “Our teams work with all of the constituent elements to reconfigure and at times redefine the benefits plan equation.”
However, having made four acquisitions this year, there may be concerns that Risk Strategies may find difficulty in integrating these firms into its fold – something Greenbaum was quick to dismiss. Prior to acquiring Arkin Youngentob, it purchased Benefits Network Insurance Agency in Ohio, Craford Benefit Consultants in Oregon, and Costello Benefits Group in Massachusetts.
“Collaboration across our platform is a hallmark of our company,” Greenbaum said. “As new firms join us they access our shared resources and we introduce their particular skills to our network more broadly. In May, we acquired the West Coast broker Craford. Their deep expertise in private equity is already being leveraged across three other Risk Strategies offices.”
Bullish on benefits
According to Greenbaum, benefits programs rarely gain the attention of risk managers, which usually focus more on property and casualty risks. But he said that this shouldn’t be the case.
“Because wages and benefits are a top three cost for most any business, those risk managers are, whether they fully realize it or not, grappling with the fallout from our challenged healthcare delivery system,” he said. “Rising costs associated with that traditional, increasingly dysfunctional, healthcare delivery and payment system can’t help but put increased pressure on risk managers to control cost in other areas of exposure.
“As a practical matter for the foreseeable future, we see non-traditional approaches to benefits program structure and funding as something businesses of almost every size and industry focus must explore to manage cost while not crippling their ability to attract and retain talent.”
Finally, Greenbaum said that Risk Strategies is “bullish” about the benefits business.
“We see enormous opportunity in working with our clients to solve hard problems, and maintaining cost-effective employee benefits plans in a competitive employment environment is a challenge that we like,” he said. “Our acquisition of Corporate Benefit Audits expanded our reach into related services. We will continue to evaluate complementary businesses that expand our reach and our ability to deliver best-in-class results to our clients.”