How One Broker, CGSC, Is Navigating Stages of Entrepreneurial Business

Entrepreneurial organizations go through stages of growth, says the chief executive of one of the world’s largest wholesale insurance and reinsurance brokerages.

Toby Esser, CEO of Cooper Gay Swett & Crawford (CGSC), says his company went through many transitions in order to become what it is today – a London-based insurance/reinsurance holding company that has increased its revenue from £20 million to more than £100 million during his tenure.

As a purely wholesale broker, CGSC is “meant to be able to service all of the independent insurance retail brokers, insurance agents around the world,” Esser said during a presentation at the Entrepreneurial Insurance Symposium sponsored by MarketScout in Dallas in September 2014. “We want to be able to say to them: ‘We have the ability to give access in any geographic market wherever that might be in the world.’ That’s been our mantra here for a long, long time.”

But it hasn’t always been that way.

When Esser joined Cooper Gay back in 1984 it was a small, Lloyd’s-centric broker that specialized in marine business and was strictly controlled by its two founders and primary shareholders.

“We went into it as an independent privately held group. We then brought in a trade investor. We then inherited a private equity group. We then decided we needed a new private equity group. We needed … a long term investor,” Esser said.

The process took time, he said, and while the benefits can be huge, “you don’t ever do this without taking on quite a bit of pain as well.”

It is incredibly difficult to move “private companies owned by founders, owned by entrepreneurial guys who started the business, into the next generation” and ensure continuing success for the organization, Esser said. “The majority of businesses like that go out of business as much as they [succeed].”

That’s because the founder is usually a strong-minded individual who is “terrific at what they’re doing, doesn’t tend to want to let go of anything.” But fostering dynamic growth in a business requires founders to surround themselves with other smart entrepreneurial types, he said.

“That was a huge problem for us in the ’90s, massively difficult, a very hard part of my career, persuading the founder to give up shareholding to a new generation with the control of the business,” Esser said.

Taking Control, Expanding

Esser still considers himself to be a London broker and CGSC to be “Lloyd’s-centric,” but an international focus has led to the rapid growth of the company that was known as Cooper Gay when Esser took over the leadership role in 2001.

At the very beginning of his tenure as CEO, Esser realized that the company needed to decide what kind of company it wanted to be. Did it want to be a lifestyle company, comfortable but without much growth, and characterized by some good years and some bad years? Or did it want to be a big, professional company and really grow the business?

“We decided we didn’t want to be a lifestyle company,” he said. “We didn’t think that was a real future in our industry and I still believe that.”

While continuing as a private company, the broker refashioned itself to operate as a public company, bringing in a non-executive chairman and non-executive directors.

“Everything, really, to try and mirror a public company even though we were not a public company,” Esser said. “We also decided we should start to look at acquisitions in a bigger way.”

Joining forces with U.S.-based wholesale broker Swett & Crawford in 2010 was one such big acquisition. Esser said the original intention was to buy only some of Swett’s units, but during the process they realized the two businesses were a “pretty good fit from a cultural perspective” and interest rose in acquiring the whole company.

At the time, Swett had a limited amount of business in the London market. However, since London was the number one writer of excess and surplus business in the United States, it was important that any big U.S. broker have access to the Lloyd’s market, he said.

“So we did the deal, a pretty complicated deal and as usual these things took a long time. And for the first time we ended up with private equity,” he said. “We want to continue buying; we have continued buying, but we have to be quite specific in terms of what it is that we want to buy.”

Global Diversity

GGSC now has 60 offices around the world and more than 1,500 employees, according to information on its website.

Esser firmly believes that remaining an internationally focused-organization with diverse clientele is important to his company’s success.

“If we don’t get a spread of diversity in our business, we’re going find one area of our business growing extremely well, at the same time other parts of our business stagnating. And that doesn’t make any sense,” he said.

The ability to maintain a sense of organizational cohesion while incorporating cultural differences definitely has its challenges, however.

“You have to be able to understand the culture,” Esser said. The trouble comes when “you don’t understand the culture of the people.”

Wherever in the world you want to operate, find good people in the territory, trust those good local people, and build infrastructure around them, he said. “You have to trust the locals; they’re the ones that truly understand the business” in their region.

On the Web

To watch a video interview of Cooper Gay Swett & Crawford’s CEO, Toby Esser, from the Reinsurance Rendezvous in Monte Carlo in September 2014: