Insurance Brokerage Firms Merge, Expand Services

Two area insurance firms that recently merged — Woodland Hills-based Scanlon Guerra Burke and Chatsworth-based Northridge Insurance Agency — form one of the larger independent insurance brokerage firms in Los Angeles County, company officials say. The combined company has $130 million in premiums, and now carries all lines of insurance, said Jim Scanlon, CEO of Scanlon Guerra Burke (SGB). It has 66 employees, other company officials said. Observers say it’s the largest local insurance brokerage firm merger the region’s seen in several years. The companies merged their assets and operations on Aug. 1 in a non-cash agreement. Northridge Insurance Agency (NIA) has moved its headquarters operations to Scanlon’s headquarters building in Woodland Hills, and there are plans to consolidate the two companies’ operations in Ventura, company officials said. FOUNDED: 1964 Former and current HEADQUARTERS: Woodland Hills employees: 38 total premiums: about $100 million Service Categories: property and casualty insurance, employee benefits, financial services The new firm also is looking at ways to consolidate and reduce certain resources, such as overlapping vendor contracts, Scanlon said. The company is not eliminating staff positions due to the merger, but some positions are being reorganized, he said. There will also be more management support in order to free up the new company’s partners of certain responsibilities. Customers may not notice the effects of the merger right away. The company has not created a new name, and former phone numbers are still used, so clients are able to conduct business as usual, Scanlon said. However, the new firm’s partners are developing a new branding strategy, which Scanlon said he hopes will be completed by the end of the year. Both companies said they will be able to better service their customers because of the agreement. “We have different product lines and occupy different space in the insurance community,” Scanlon said, noting that SGB mainly served larger commercial clients while NIA focused on smaller ones and offered personal insurance lines. SGB, founded by Scanlon’s father in 1964, has developed a niche working with the manufacturing, industrial and tool industries, Scanlon said. The company has seen considerable business growth over the past five to seven years as it added its safety loss control services, he said. NIA was founded in 1931, and was purchased by another owner and then it was eventually bought by several partners in 2006, said co-owner Stuart Lorch, who was among the partners who purchased the company five years ago. NIA, which also has been growing consistently, has developed a niche in the nonprofit and social services sector, he said. FOUNDED: 1931 Former HEADQUARTERS: Chatsworth Employees: 32 total premiums: about $30 million Service Categories: personal insurance, commercial insurance, life and health insurance, employee benefits The merger particularly gives SGB a stronger presence in Ventura County, since NIA had two well-established offices in Thousand Oaks and Ventura outside of its former Chatsworth headquarters. SGB had a Ventura office, but it was small and has only been around for about a year. “We’ve wanted to continue to grow our presence in Ventura County and this allowed us to grow faster by aggregating resources in (the area),” Scanlon said. Scanlon and Lorch said they expect the merger to financially benefit the new company. “We’re expecting to be a little more profitable, and by increased profits, we’re able to invest more in our business, whether it’s through personnel or products,” Lorch said. Eric Rothman, president of Insurance Brokers and Agents San Fernando Valley, said the merger is among the most significant he’s seen in the region in several years. There used to be much more merger and acquisition activity, but that has died down due to the economic downturn and lower business valuation, Rothman said. “People aren’t paying what they used to pay for the business,” he said. There are also fewer mid-sized brokerage firms left to merge with or acquire, he said. Benefits of an insurance brokerage firm merger may include having more diverse insurance expertise, access to new clients and other people to help running day-to-day operations, Roth said. One advantage of merging two companies of a similar size — as opposed to a small firm being acquired by an industry giant — is a similar business culture, he said. “People don’t like to have a corporate atmosphere,” Rothman said. “You don’t really change the culture of the business. You’re just trying to improve the business by merging different thoughts.”