Episode summary
PE Perspective on Insurance Brokers - [Business Breakdowns, EP.225]
Business Breakdowns
· · 59 min · Hosts: Matt Reustle · Guests: Aaron Cohen
![PE Perspective on Insurance Brokers - [Business Breakdowns, EP.225] – Business Breakdowns](https://i.ytimg.com/vi/MIiE-SGbXy8/hqdefault.jpg)
Summary
GTCR’s Aaron Cohen argues that insurance brokerage is attractive because it combines recurring revenue, low capital intensity, strong free cash flow, and a fragmented market that still offers plenty of acquisition targets. He says the business is less cyclical than many others because companies need insurance in good times and bad, and that premium growth tends to flow through to broker revenue in the commission-based middle market. The main driver of value creation, in his view, is not price-setting power but access to customers, carrier relationships, and specialization.
Cohen says GTCR’s edge is its “leader strategy”: backing proven CEOs with sector expertise, then giving them the infrastructure to scale. He explains that great CEOs are not interchangeable across industries or company sizes, and that the firm looks for leaders who have already created equity value and can bring strong teams with them. In insurance brokerage, that setup lets GTCR centralize technology, compliance, and back-office work so producers can focus on selling.
He also says the space is still in the early innings on technology adoption, especially around unified agency management systems and AI-enabled workflows. On risk, he sees no existential threat, but notes that soft markets, carrier profitability, and regulation can affect growth and valuations. He expects continued consolidation, with large strategics, public markets, and private equity all remaining active buyers.
Key takeaways
- Aaron Cohen says GTCR underwrites insurance brokerage around recurring revenue, asset-light economics, and a highly fragmented market with continued M&A upside.
- Cohen says the most important investment decision is the CEO, and GTCR prefers leaders who have already created equity value in the same industry.
- Cohen says a solid insurance broker can generate 28 to 35% EBIDA margins, with higher margins often coming at the expense of organic growth.
- Cohen says technology adoption is still early, with the industry roughly “in the third inning” on data and systems modernization.
- Cohen says premium growth, social inflation, and new risks like cyber can lift broker revenue because brokers earn a percentage of premium in the middle market.
Notable quotes
“we think the CEO is the most important decision we make when we underwrite an investment”
“This is an industry where regardless of what's going on in the economy, you need to have insurance”
“I love insurance brokerage because of one word, diversification. And I mean that across every aspect of this business”
“I think this industry is still behind many others. And second, what's changed is these brokers have become bigger”
“the best part about this industry insurance brokerage is insurance brokers do not take risk”
How the episode opens
This is business breakdowns. Business breakdowns is a series of conversations with investors and operators diving deep into a single business. For each business, we explore its history, its business model, its competitive advantages, and what makes it tick.
We believe every business has lessons and secrets that investors and operators can learn from and we are here to bring them to you. To find more episodes of breakdowns, check out join colossus.com. All opinions expressed by hosts and podcast guests are solely their own opinions.
Hosts, podcast guests, their employers or affiliates may maintain positions in the securities discussed in the podcast. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. This is Matt Russell and today's breakdown caters to both public and private investors alike.
My guest is Aaron Cohen, head of the financial services and technology group at GTCR, and our topic is insurance brokers. Now, I was initially intrigued by Aaron and GTCR after seeing their announced $13 billion sale of Assured Partners to Arthur J. Gallagher, an incredible success story in the insurance brokerage space that we covered in a previous breakdown.
But what I failed to appreciate, and you will hear Aaron correct me in the episode, is that not only did GTCR own Assured through two separate periods, they actually built the business with CEO Jim Henderson from the ground up. So, we get into GTCR's approach to scaling businesses. We use the lens of insurance brokerage, but we get into the nuances of their leadership strategy and why this space is so attractive to the PE market.
The last thing I need to highlight, if you listen to these episodes, you know my frustration with not acknowledging risks to a business thesis, but the way that Aaron addressed this was a great example of conviction to me, not intellectual dishonesty, and that really stood out.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- insurance brokers
- private equity
- leadership strategy
- technology in insurance
- social inflation
Companies and tickers mentioned
- AJG
- GTCR
- Assured Partners
- Arthur J. Gallagher
Watch the episode
Watch “PE Perspective on Insurance Brokers - [Business Breakdowns, EP.225]” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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