Since its acquisition last year by Florida-based AssuredPartners Inc., the Indiana operation of Neace Lukens has been looking more aggressively to acquire smaller benefits brokers. In the past month, Neace Lukens has announced deals to buy Benefit Concepts, a six-person benefits consultancy in Indianapolis, and Matrix Benefits and Consulting Group, a one-person benefits shop in Fort Wayne. Eric Chelovitz, managing director of Neace Lukens’ 34-person Indianapolis office, said he expects more consolidation in the industry.
IBJ: Do you expect to do more acquisitions after these two recent deals?
A: We’re always on the lookout for additional agencies where the principals maybe feel it’s time to be acquired. Or they don’t have a perpetuation plan and they’re ready to, if you will, cash in. Companies that have a good client base, a good reputation in the marketplace. We probably are looking more aggressively now, especially with our relationship with Assured Partners.
IBJ: What are the biggest factors driving mergers among benefits brokers?
A: You have a number of agency principals or owners that—they’ve put in their time, they’ve had the agency 20, maybe 30, years—they’re looking to get their sweat equity out of the agency, if you will. Also, I think there’s a lot of owners that are thinking, well, if capital gains taxes are going to go up [in 2013], maybe now is the time.
IBJ: What impact is the 2010 health reform law, which is leading health insurers to no longer wrap broker commissions into the premiums they charge employers, having on broker mergers?
A: Some of your employee benefit agencies are—I don’t know if running scared is the right term, that might be too strong—but that might be a motivating factor. Obviously, a lot of that hinges on what the Supreme Court does this summer and the upcoming presidential election. There may be some concern there, that the value of their business might deteriorate.