CORPORATE
PROFILE; Chairman, president and chief executive officer |
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BRIARCLIFF MANOR - Growing up
as the son of an insurance agent in Cincinnati, David Eslick appreciated a
business that helped protect homes, cars and businesses from unexpected losses
and financial wipeouts. After college, he followed in his father's footsteps. |
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Eslick, 45, has worked in the
insurance field ever since. |
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"It's a people business
and a human capital business and I love working with people," Eslick said.
"Our role and responsibility is to help people and companies avoid risk.
We can put together a program that if something does happen we can get them
back in business." |
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These days Eslick is chairman
and chief executive officer of USI Holdings Corp. It is a fast- growing company
that last year moved its headquarters to Briarcliff Manor from San Francisco. |
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USI offers insurance brokerage,
benefits management and retirement plan services through 59 offices in 20
states. |
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After making more than 100
acquisitions during its 10-year history, USI has grown into the nation's
ninth-largest insurance broker. The company places more than $3 billion of
insurance coverage annually. It has about 60,000 customers - from mom- and-pop
businesses to Fortune 2000 giants. |
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Yet USI's focus is the 1.1
million middle-market businesses with 20 to 1,000 employees. |
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"It is one of the largest
markets for insurance products in the United States," Eslick said. "It
is our sweet spot. We want to handle more than just one of their needs, whether
it's their property and casualty coverage, their employee benefits, their
retirement programs, their life insurance, their asset management." |
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The middle market is a
fragmented business served by about 30,000 insurance brokers nationally. As the
largest player in the segment, USI is the "800-pound gorilla," but
still has a market share of just 2 percent, he said. |
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"It is still a huge upside
opportunity for us if we continue to grow," Eslick said. |
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USI made six acquisitions in
2003 and another two this year. Eslick's goal is to use buyouts to make USI a
bigger player in its existing markets concentrated along the Atlantic and
Pacific coasts. While it has a presence in most major metropolitan areas,
including New York, it has little business in smaller states in the South and
West. |
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"There are really no new
states that we are thinking about over the next three years that are highly
critical to us," Eslick said. "Our strategy is really built around
continuing to get stronger where we are already operating." |
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David Lewis, an analyst with
SunTrust Robinson Humphrey in Atlanta, rates USI's stock a buy. Lewis said USI
could benefit from strong sales growth from existing customers, additional
revenues from acquisitions and internal expense controls. |
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Lewis said in a research report
that USI is "one of the better positioned players within the insurance
brokerage sector." He added that one risk for USI is a slowdown in the
U.S. economy and job market hurting the company's revenue growth. |
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From talks with clients, Eslick
knows that the escalating costs of employee benefits are worrying managers in
Corporate America. The bill for employee health insurance, for example, has
been rising 15 percent a year. |
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"We as U.S. citizens want
maximum health-care treatment all the way through the end of our lives,"
Eslick said. "As long as we want those things, the costs will continue to
increase. But there is an offsetting benefit in quality of life with
that." |
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Out-of-pocket expense |
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Across the country, some
companies are responding by requiring workers to pay more out of pocket for
health insurance through increased payroll deductions. Eslick said USI's
corporate customers have often tried a different approach: Giving workers a
fixed amount to spend on benefits of their choice. |
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"It limits costs in that
employees are selecting only benefits that are really important to them,"
he said. "The best way to limit costs is to bring employees back into the
picture as consumers." |
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Rising costs for property and
casualty insurance hit New York after the terrorist attacks on Sept. 11, 2001,
as insurers reacted to greater perceived risks. Insurers also attempted to use
higher premiums to offset lower returns on their interest-sensitive and equity investments. |
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But after annual increases of 5
percent to 20 percent from 2000 to 2002, Eslick expects that property and
casualty rates will rise no more than 2 percent in 2004 and fall as much as 5
percent in 2005. |
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"The psychological impact
was huge," he said of the terrorist attacks. "After Sept. 11, trying
to find insurance coverage for New York high-exposure property became very
difficult and very expensive. Fortunately there has been no follow-up (attack)
since Sept. 11, so now those rates are starting to come down fairly
significantly." |
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The move to Westchester |
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USI was founded in 1994 using
seed money from Dillon Reed, a New York investment firm. Even though the
company's presence in Westchester County dates to the mid-1990s, Eslick decided
it made sense to move the headquarters there after an initial public offering
of USI's stock in October 2002. |
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"We were spending a lot of
time in New York with our investment bankers and commercial
bankers," Eslick said. "Quite a bit of the stock of the company is
owned by mutual fund companies in New York City and Boston." |
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Eslick also likes the tranquil
feel of USI's Briarcliff Manor office complex, nestled among trees. USI
frequently uses a conference center and a Tudor home on the property, built for
the Rockefeller family minister in the 1920s, as sites for employee meetings. |
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About 200 of USI's 2,500
employees work in Westchester. |
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"We wanted a place that
was more than a corporate headquarters that could serve as a training facility
for our employees," Eslick said. "We wanted a campus-like setting as
opposed to a downtown setting. This property provided that capability for
us." |
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The casual dress of many
employees fits the informality of the setting on a recent Friday. Eslick was
wearing a sports shirt without a tie. |
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"We don't think we get any
smarter the better we dress," he said. "We want people to feel
comfortable with what they are doing, so they can be efficient. ... That said,
we don't go to clients without a suit and tie." |
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Eslick said there is very low
overhead at the headquarters. |
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"We are not interested in
building a corporate bureaucracy," he added. "We have less than 2
percent of our total employees work in corporate. That means we continue to
focus on putting our resources out in the field." |
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Investors apparently like what
they see. USI's stock is up 32 percent during the last year. Net sales of $92.5
million jumped from $82 million a year earlier. Net income of $5 million rose
from $4.97 million. |
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Eslick said USI is on the road
to sustained profitability after several years of losses due to restructuring
charges. Much of that restructuring came as Eslick worked to integrate USI's
acquisitions into a single company. |
"It was like we had a
really good running car, but we had to tweak the engine and the tires,"
Eslick said. "So we put the car in the garage, shut the garage door and
did the work we needed to do for a couple of years. And then in 2002 we opened
the garage door and pulled out a very nice looking, well-run car."
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