Insurance firm plans to expand
A Grass Valley wholesale insurance network has been acquired in a deal that the company says will provide money for an expansion that would add hundreds of jobs to the area.
“We see ourselves as a major employer for Grass Valley and Nevada County,” said Michael Lewis, chairman and chief executive of Networked Insurance Agents.
Networked was recently acquired by Strong Wood Insurance Holding Corp. – a Delaware entity formed for the acquisition – for an undisclosed amount.
The deal also includes the pending acquisition of an unidentified insurance carrier, and a retail agency that will sell directly to the public.
Networked, a McCourtney Road firm, hopes to add as many as 400 people to its current 100-employee staff within the next five years, provide services in 20 Western states, and capture a $1 billion chunk of the $300 billion in insurance premiums renewed annually in the United States.
Immediate plans are to hire 20 to 25 people. Longer term, the company may go public. The acquisition was announced to employees a month ago.
Fueling the expansion will be a line of credit in excess of $200 million, provided by an investment group led by J.P. Morgan Partners.
Networked acts as a middleman between large insurance carriers and the small insurance agents next door.
Networked’s niche of providing small- to medium-sized agencies with insurance packages and underwriting services has helped the company grow from five employees, handling $2 million in premiums in 1994, to $85 million in premiums this year. The company is expected to achieve net revenues of $10 million in 2002.
The company functions as a sort of branch office for major insurance companies, taking over rating, underwriting, quoting and policy issuance – work the large firms may not want to handle, because it is not economical to do so for small agents.
“They have a strategy that can’t be beat,” said K. Brent Humes, Network’s chief operating officer and a former vice president with Hartford Financial Services. “It’s a great strategy, that we think we can help them expand, and expand dramatically,”
The thing that intrigued the investors, said Humes, is that NIA provides the small, retail agent with access to a large number of standard, very highly-rated, very professional carriers.
On the flip side, NIA provides carriers with access to the small retail agents’ business.
“So, it’s kind of like a two-ended funnel – we provide access from the retailers to the carriers, and from the carriers to the retailers,” said Humes.
While it had a good business plan, the company needed more capital to grow and improve its technology, said Michael Lewis, a company founder.
“We were a small corporation, relatively small, and it’s hard to do the investment that you have to do in technology and growth with your own personal funds,” said Lewis.
Heading the new acquisition will be newcomers Humes and Rick Quagliaroli, the holding company’s chief executive officer and a former Hartford executive; along with Lewis, chairman and chief executive officer; and A. Lee Johnson, president.
Larry Burkhardt, president and chief executive officer of the Economic Resource Council, is helping Networked look for more office space.
Networked executives credited Burkhardt with keeping them here a few years back, when the company was looking for space.
Support Local Journalism
Support Local Journalism
Readers around Grass Valley and Nevada County make The Union’s work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User