Private Equity Backing AGI, an AI-Enabled Platform for Faster Brokerage Growth
Despite growing concerns about private-equity-backed ventures and the use of artificial intelligence, an Atlanta-based firm said it has launched an AI-enabled platform designed to help insurance brokerage partners grow at faster rates.
American Growth Insurance (known as AGI) announced last week that it is led by CEO Brian Morgan, who was previously the chief revenue officer at Keystone Agency Partners, an independent agency network. Morgan has more than 30 years’ experience building brokerages, the company said in a news release.
AGI is backed by almost $70 million in funding from Rockbridge Growth Equity and by Atomic, a venture capital firm.
American Growth leadership spent the past year working with 10 insurance agencies to develop and test its AI-based operating model, improving average agency profits by more than 50% through revenue growth and productivity, the firm said. AGI now plans to complete several more agency acquisitions by the end of this year.
The firm pointed to a recent report from MarshBerry, an investment banker and consulting firm. The research showed that the fastest growth rates are seen in the largest agencies: The top 50 firms account for 96% of U.S. brokers’ total revenue, with the next 50 firms representing only 4%. The average five-year compound annual growth rate for firms ranked in size from 50 to 100 is 7.1%, less than half that of the 50 largest. AGI plans to change that for partner agencies, the firm explained in a news release.
Michael Stenclik, vice president of Atomic, said the venture capital firm had studied some 1,000 service industries before deciding on insurance agencies as a business model. Insurance distribution is ripe for being rebuilt with the help of AI, he noted.
The AGI announcement comes amid warnings from academic studies and others about the demands that private equity-backed firms have to place on profit growth, sometimes at the expense of employment and community support. Researchers at the University of Chicago Law School recently wrote that private equity funds control more than $9 trillion in assets and thousands of companies, yet their leverage-driven model often amplifies financial fragility and social harm.
“The PE investment model can and should continue to be a substantial vehicle for productive investment, but under current rules it too often amplifies fragility and social harm without recognizing and pricing risks that are externalized,” the authors noted.
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