Mizel builds financial firm to serve middle market
USI Founder's New Venture to be One-Stop Shop
Sally Roberts

SAN RAMON, Calif. — Longtime insurance brokerage executive Bernard H. Mizel is back to doing what he's known best for in the industry: building a middle-market brokerage.

Since investing his own money in San Ramon, Calif.-based California Coastal Insurance Inc. in 2003, Mr. Mizel has been quietly transforming the 40-year-old family-owned property/casualty brokerage into an integrated financial services distribution firm.

That transformation, which included changing the name to CCI Financial & Insurance Services, is nearly complete following the May buyout of CCI's founder Michael Henry Vawter and the hiring of Valli Bowman, a former executive of San Diego-based employee benefits broker Intercare Insurance Solutions, to become CCI's chief operating officer, Mr. Mizel said.

Mr. Vawter's sons, James P. Vawter and Michael Vawter, were named CCI's president and chief executive officer, and executive vp, respectively, earlier this year. Mr. Mizel is chairman.

Today, CCI is in the process of completing its first merger with an unspecified financial services administration firm, which it expects to complete in January. The company has set its sights on adding human resources, safety consulting and 401(k) administration capabilities soon.

Within the next three months, executives say CCI will be able to offer clients — those with between 25 and 250 employees — a full suite of integrated property/casualty insurance and employee benefits products, automated payroll services, human resources consulting and outsourcing, and retirement planning and executive benefits through a platform it calls SingleSource.

Such an integrated approach has been a longtime goal of Mr. Mizel's and one he attempted to execute when he formed USI Holdings Corp. in 1994, he said. Mr. Mizel retired as USI's chairman and CEO in 2002 (see chart, page 33).

"USI morphed into something more like a conventional brokerage firm," Mr. Mizel said. "We were acquiring so quickly we just couldn't train the salespeople to do what we were talking about. CCI is going to be very disciplined and very focused on the integrated concept, and it will include all the elements of administration that we really didn't have with USI."

Moreover, unlike other agents and brokers that partner with outside vendors to provide payroll, human resources and other services, CCI is differentiating itself by bringing all of its capabilities under one in-house platform, Mr. Mizel said. Such an approach not only saves customers time and money, it also allows CCI to better weather the insurance cycles, he said.

But to be truly successful, "you have to have a deliverable you control and it has to be integrated with the salespeople," he said.

Mr. Mizel said he wants to grow CCI — which reported about $5.5 million in 2007 revenues — to about $25 million in annual revenues in the next three to four years through a series of mergers, which he says he prefers to acquisitions because the two parties' interests are better aligned.

At that point, he said CCI's leaders may decide to expand its regional footprint.

"We set this up as a platform for the development of a large regional brokerage firm," with initial plans to keep it in California, Mr. Mizel said.

At 72, he said he doesn't want to travel anymore.

Trend toward diversification

Observers say CCI's strategy indicates a growing diversification trend today among middle-market agents and brokers.

"Leading brokers are moving towards this model as a mechanism to provide clients with a series of value-added services, while at the same time diversifying the broker's risk profile relative to P/C rates," said Patrick T. Linnert, executive vp of consulting firm Marsh, Berry & Co. Inc. in Willoughby, Ohio.

"Does it mean that all agents and brokers are out there with that kind of diversified offering? Absolutely not," said Demmie Hicks, president and CEO of DBH Consulting Inc. in Atlanta. "But are there agents and brokers who have had that as a strategic initiative for a number of years now? Absolutely," Ms. Hicks said.

Whether those diversified services are outsourced or offered under one roof doesn't make that much of a difference, said Bobby Reagan, president of Atlanta-based Reagan Consulting Inc.

"I am not aware of any situations where a fully integrated and fully in-house insurance operation outperformed others that offered those services but did so by outsourcing some portion of them," Mr. Reagan said.

"The success is more of a function of the quality of their people and the job they can do and not whether...they are fully integrated and fully in-house," Mr. Reagan said.

Timothy J. Cunningham, for one, said he's uncertain about the success of a single-source option for commercial buyers.

"I don't perceive a need from employers for a one-stop-only approach with all these products and services," said Mr. Cunningham, a principal of OPTIS Partners L.L.C. in Chicago.