00:00:06.089 --> 00:00:07.860 We are a moving company at the end of the day. 2 00:00:07.950 --> 00:00:11.910 We're a means to an end, not a destination. We're going to find that path together. 3 00:00:18.241 --> 00:00:23.370 Today my guest is Jim Burr, co-head of Global Financial Services with Carlyle. 4 00:00:23.491 --> 00:00:24.510 Jim, how are you today? 5 00:00:25.140 --> 00:00:28.140 Al, great to be here, and I appreciate the invite. 6 00:00:28.290 --> 00:00:30.210 I'm ecstatic to be with you today. 7 00:00:31.620 --> 00:00:34.890 Very excited. Certainly, we have a lot in common. 8 00:00:35.520 --> 00:00:41.070 Like my business, Sica | Fletcher, you guys have been icons in the insurance 9 00:00:41.130 --> 00:00:45.990 brokers and distribution space. We have a lot of commonality and investments and 10 00:00:46.050 --> 00:00:50.850 whatnot, and done some things together and would love to share with the people out 11 00:00:50.880 --> 00:00:55.020 there today all that we've done, and you've done, and as much as you want to tell 12 00:00:55.051 --> 00:00:58.920 them currently what you're looking like with some of these things and where you see 13 00:00:58.981 --> 00:01:02.011 the future for Carlyle and insurance distribution. 14 00:01:02.370 --> 00:01:07.500 Sure. No, love to. Yeah, we haven't spent a ton of time together, but as it turns 15 00:01:07.590 --> 00:01:11.220 out, we've been all around each other for, I don't know what it's been, probably 16 00:01:11.370 --> 00:01:17.250 25, 30 years. I started at First Union, and I think you had a lot to do with 17 00:01:17.310 --> 00:01:22.110 the beginnings of our insurance brokerage platform there and then 18 00:01:23.160 --> 00:01:26.370 became the corporate treasurer of the combined First Union, Wachovia. 19 00:01:27.540 --> 00:01:31.890 And I think out of that, you helped us spin what is now Baldwin. 20 00:01:33.420 --> 00:01:37.771 And then, of course, we're invested in Hilb with Ricky Spiro and Ignyte. 21 00:01:37.830 --> 00:01:40.980 We were just talking about a little bit, and NSM, former NSM with 22 00:01:42.720 --> 00:01:45.030 McKernan Brothers, so a lot of touchpoints. 23 00:01:45.090 --> 00:01:49.980 And of course, John Hahn and Tom O'Neil, Galloway Epic 24 00:01:51.271 --> 00:01:52.560 touchpoints as well, so. 25 00:01:52.830 --> 00:01:57.601 You're bringing up a lot of good memories because you go back to the First Union 26 00:01:57.630 --> 00:02:03.510 days, right? And that was Tribune, was the first investment there, the real 27 00:02:03.601 --> 00:02:08.551 significant investment, and we were the advisor on that transaction way back when. 28 00:02:08.700 --> 00:02:13.050 That had to be 2000, right? I think something along those lines. 29 00:02:13.410 --> 00:02:19.171 And the combination with Wachovia and First Union as financial institutions, 30 00:02:19.560 --> 00:02:23.520 obviously Davis Baldwin was the other side of it, from the Wachovia side. 31 00:02:23.641 --> 00:02:27.421 So that all came together, and that's how I got to know the Baldwins. 32 00:02:28.650 --> 00:02:30.840 But yeah, it goes way back to that, Jim. 33 00:02:30.900 --> 00:02:35.280 But like you said, we haven't spent a ton of time together, but we've been all 34 00:02:35.370 --> 00:02:41.160 around it. Obviously, most recently, like you said, The Hilb Group, okay, 35 00:02:41.310 --> 00:02:47.160 over the last several years. 2019, I think, when you came into that investment, 36 00:02:47.250 --> 00:02:52.260 December, when we were instrumental in bringing you into that, and it's a story 37 00:02:52.320 --> 00:02:57.180 around that one, too. But that's been a great investment for you and for ourselves. 38 00:02:58.080 --> 00:03:02.460 Very excited about that and what's going out with The Hilb Group and certainly NSM, 39 00:03:02.520 --> 00:03:04.950 our friend Jeff McKernan, which is now Ignyte. 40 00:03:05.400 --> 00:03:05.641 And 41 00:03:06.960 --> 00:03:10.320 Jeff and I, we didn't bring Carlyle into this, obviously. 42 00:03:10.770 --> 00:03:15.299 I think you were probably the fourth or fifth investor into Jeff's world. 43 00:03:15.660 --> 00:03:19.171 But we were the original people that brought in Abry for Jeff. 44 00:03:19.230 --> 00:03:21.480 But listen, it's a small world, right? 45 00:03:21.660 --> 00:03:24.810 And there's a lot going on, and there's been a lot of success. 46 00:03:24.870 --> 00:03:29.820 But listen, Carlyle has been at the forefront as far as private equity groups I'm 47 00:03:30.510 --> 00:03:35.610 concerned. And obviously, you guys are a phenomenal company, and 48 00:03:36.390 --> 00:03:39.720 it's been really interesting to see what you've done in the space. 49 00:03:39.810 --> 00:03:44.370 So I think a lot of people would love to hear about your thoughts around some of 50 00:03:44.430 --> 00:03:48.601 these investments, about what's going on in the market, how it could affect some of 51 00:03:48.660 --> 00:03:52.921 these things, next steps, et cetera, whatever you want to share around them. 52 00:03:52.980 --> 00:03:56.851 And obviously, these are all around the equity side. 53 00:03:56.910 --> 00:03:59.520 I know there's one of our investments as well. 54 00:03:59.610 --> 00:04:02.851 You guys are in on the debt side, too, which we won't spend a lot of time on, which 55 00:04:03.180 --> 00:04:08.640 is Trucordia, formerly SCF too. So we have that in common, but not really what 56 00:04:08.701 --> 00:04:11.910 you're connected with. But everything else, we'd love to be able to chat about. 57 00:04:12.240 --> 00:04:17.190 Yeah, that'd be great. Yeah, look, I think Carlyle Insurance Broking has been, as 58 00:04:17.220 --> 00:04:23.010 you suggested, sort of a power alley core competency of ours 59 00:04:23.070 --> 00:04:27.900 for years and years and years. I remember when we first did our first deal with 60 00:04:28.350 --> 00:04:32.580 John Hahn, I think he called up John Rodette. Now you know John Rodette, I think. 61 00:04:33.060 --> 00:04:34.080 Yes, very well. 62 00:04:34.289 --> 00:04:38.281 The president of, one of the co-presidents at Carlyle. 63 00:04:38.550 --> 00:04:41.850 It's been a huge focus point for us. 64 00:04:41.910 --> 00:04:42.420 We've done, 65 00:04:44.400 --> 00:04:45.720 I don't even have the number in my mind. 66 00:04:45.750 --> 00:04:50.310 It's probably 12 investments in the insurance ecosystem, insurance services, 67 00:04:50.370 --> 00:04:52.170 including companies like Sedgwick. 68 00:04:53.670 --> 00:04:53.970 It's 69 00:04:55.680 --> 00:05:01.170 an area like most of the things that we do. It's a very people-oriented business. 70 00:05:01.260 --> 00:05:04.500 The assets go up and down the elevator every day. 71 00:05:05.160 --> 00:05:08.130 The relationships are absolutely critically important. 72 00:05:09.451 --> 00:05:11.040 A couple of the mantras I would say 73 00:05:12.390 --> 00:05:14.070 of our strategy has been 74 00:05:15.451 --> 00:05:18.540 find good companies, but more importantly, find great management teams. 75 00:05:19.980 --> 00:05:22.170 Build the best level of 76 00:05:24.360 --> 00:05:27.390 alignment that you possibly can. It's been a great run. 77 00:05:27.480 --> 00:05:33.451 We've spent 20 years, I would hope, building a reputation as great partners 78 00:05:33.750 --> 00:05:38.790 for these guys. It feels like these days when we meet with teams, we have a bit of 79 00:05:38.880 --> 00:05:44.640 that patina around us and our ability to kind of 80 00:05:44.970 --> 00:05:47.430 garner the hearts and minds of the teams that we want to invest in. 81 00:05:47.580 --> 00:05:50.070 It's a lot easier than it was when we started. 82 00:05:51.031 --> 00:05:54.690 It's from a lot of years, I think, of trying to treat people fairly, too. 83 00:05:55.080 --> 00:05:59.580 And it's a business, as you know. Those relationships are absolutely critical 84 00:06:00.120 --> 00:06:00.750 through the years. 85 00:06:01.230 --> 00:06:06.690 Well, you've been leaders as far as I'm concerned in insurance 86 00:06:06.750 --> 00:06:10.980 brokerage. With all the investments, like you said, if you have a dozen or so, and 87 00:06:11.341 --> 00:06:15.000 I'm obviously familiar with the ones we have in common, okay. 88 00:06:15.330 --> 00:06:19.260 But Carlyle is a powerhouse in its own right. 89 00:06:19.770 --> 00:06:23.400 And in this space, you're clearly a powerhouse. 90 00:06:23.520 --> 00:06:27.180 And it's been very evident, and it's been very successful for you. 91 00:06:27.270 --> 00:06:32.130 Obviously, insurance brokerage has been the darling of a lot of private equities. 92 00:06:32.490 --> 00:06:37.170 And I say this on almost every podcast because of the high margin, the residual 93 00:06:37.230 --> 00:06:40.140 business, and most of the products you need by law. 94 00:06:40.530 --> 00:06:43.770 It's basically recession-proof. 95 00:06:44.190 --> 00:06:48.870 So it's been a great run for us, for me. 96 00:06:48.960 --> 00:06:53.970 And I didn't set out to be in insurance brokerage when I got involved in this, and 97 00:06:54.240 --> 00:06:55.831 certainly not from this side of the ball. 98 00:06:56.760 --> 00:07:00.120 But it's really worked out, and we've gotten ourselves involved, and we're very 99 00:07:00.210 --> 00:07:01.201 pro-private equity. 100 00:07:02.910 --> 00:07:08.701 Very much so, because it's really what's changed the industry in the last 13, 14, 101 00:07:08.790 --> 00:07:11.610 15 years. Okay. Even though private equity 102 00:07:13.591 --> 00:07:18.451 really came in around the early '90s with USI was the first one. 103 00:07:19.710 --> 00:07:25.110 I think this has been an incredible run for private equity that's not going to end. 104 00:07:25.831 --> 00:07:30.660 I can't tell you, Jim, how many phone calls or emails or whatnot that I get on a 105 00:07:30.690 --> 00:07:35.820 weekly basis from private equity that wants to enter this space, all different 106 00:07:35.850 --> 00:07:41.010 shapes and sizes. And I'm very polite. I talk to a lot of them. 107 00:07:41.490 --> 00:07:45.990 Most of them don't really know the space, but it makes more sense to me when we do 108 00:07:46.050 --> 00:07:50.130 these recapitalizations, which we've done a dozen or so of them ourselves, been 109 00:07:50.190 --> 00:07:54.690 involved in. Mostly the ones that we've invested in alongside when we bring the 110 00:07:54.720 --> 00:08:00.660 money in, that's we invest. When we do these recapitalizations, it pays to continue 111 00:08:00.690 --> 00:08:02.970 to work with people that know the space. 112 00:08:03.420 --> 00:08:06.720 It's really important and critical, and you're at the top of that list. 113 00:08:06.780 --> 00:08:11.730 And you can almost be able to invest in almost any size. 114 00:08:11.760 --> 00:08:16.860 You're one of the few private equities at your size and scale that probably could, 115 00:08:16.980 --> 00:08:21.960 by yourselves, invest in some of the larger platforms that are still out there that 116 00:08:22.050 --> 00:08:24.570 still have another runway to stay private. 117 00:08:24.960 --> 00:08:27.420 There are some of them getting pretty big these days, for sure. 118 00:08:28.140 --> 00:08:34.020 But to your point, it's an asset that lends itself very nicely to private equity. 119 00:08:34.050 --> 00:08:38.640 As you said, high retention rates, mid-90s retention rates. 120 00:08:40.951 --> 00:08:44.520 Good organic growth rates. Typically, the market's a little soft right now. 121 00:08:45.780 --> 00:08:49.800 If you expect hard markets your entire hold period, probably should do something 122 00:08:49.860 --> 00:08:55.710 else. You've got to recognize the asset and where you are in cycle. 123 00:08:56.040 --> 00:08:59.760 Very strong free cash flow, to your point, and obviously a fragmented market. 124 00:09:01.140 --> 00:09:06.030 So there's a lot to like about it. One of the things that was an absolute 125 00:09:06.061 --> 00:09:10.920 requirement for us early and often was full levels of integration. 126 00:09:11.550 --> 00:09:14.599 And I think Almost everybody tries to say that. 127 00:09:14.928 --> 00:09:18.288 Integration somehow has become a term of art versus 128 00:09:20.328 --> 00:09:21.708 meaning something as much anymore. 129 00:09:21.768 --> 00:09:21.978 But 130 00:09:23.208 --> 00:09:24.528 for us, it's always been 131 00:09:25.908 --> 00:09:31.849 full systems integration, full management integration, singular brand for 132 00:09:31.908 --> 00:09:35.388 requirements. Even when those things weren't as popular, we always felt like 133 00:09:36.768 --> 00:09:39.678 ultimately when you go to exit one of these companies or 134 00:09:41.688 --> 00:09:43.849 when it finds its ultimate ownership 135 00:09:45.588 --> 00:09:50.808 path, whatever that is in the future, it needs to be a singular organization. 136 00:09:51.138 --> 00:09:55.428 And most importantly, and the most difficult part to do as you can imagine, is 137 00:09:55.488 --> 00:09:58.188 developing a single integrated culture. 138 00:10:00.198 --> 00:10:01.668 And I think if you've done that, 139 00:10:03.198 --> 00:10:05.988 today, I think the market is more discerning. 140 00:10:06.078 --> 00:10:11.268 Today, if you're not in that situation, it's probably a difficult story 141 00:10:12.018 --> 00:10:13.548 to bring fresh equity in. 142 00:10:15.048 --> 00:10:15.168 As 143 00:10:16.488 --> 00:10:21.378 is importantly, I think from that perspective, if you're not integrated like that, 144 00:10:21.438 --> 00:10:27.198 it's very difficult to take full advantage of the opportunities that AI 145 00:10:27.258 --> 00:10:29.808 presents to itself. I think a lot of people 146 00:10:31.008 --> 00:10:36.858 don't appreciate that your data has to be in one place, 147 00:10:36.918 --> 00:10:41.418 your data has to be singular and clean and understandable across your geos and 148 00:10:41.448 --> 00:10:46.488 across your strategies for AI to be able to utilize it in a way that's 149 00:10:46.548 --> 00:10:47.148 leverageable. 150 00:10:49.368 --> 00:10:53.599 It's critically important. I think an example like Hilb, when we acquired that, 151 00:10:54.048 --> 00:10:57.288 that wasn't really part of their core competencies. 152 00:10:57.858 --> 00:11:02.628 To your point to that, we really as much backed Ricky Spiro as we did by the 153 00:11:02.658 --> 00:11:08.058 company, completely. Ricky was known well to my partner, John Odette. 154 00:11:09.408 --> 00:11:14.808 And Ricky was very much of the view that full integration was absolutely critical. 155 00:11:14.838 --> 00:11:20.178 When you roll forward five, six years now, I think of it, and I can't say this with 156 00:11:20.268 --> 00:11:23.898 factual because I haven't been in every one of these shops, but I think it's 157 00:11:24.048 --> 00:11:29.118 probably the most integrated private equity controlled platform. 158 00:11:29.628 --> 00:11:35.178 And our ability now to start to utilize AI capabilities is 159 00:11:36.918 --> 00:11:40.668 meaningfully enhanced from where it would've ever been. 160 00:11:40.728 --> 00:11:46.638 It's one of the platforms we have that I think is best suited to put AI 161 00:11:46.698 --> 00:11:51.258 to work. In an industry, by the way, that I think, and hopefully more and more 162 00:11:53.568 --> 00:11:56.388 folks are starting to realize is going to benefit from AI. 163 00:11:56.478 --> 00:12:02.118 This is not the insurance that we're talking about, which is more specialty, 164 00:12:02.418 --> 00:12:03.469 less homogeneous, 165 00:12:04.728 --> 00:12:09.349 required insurance. I think you're going to find AI to be a massive enhancement, 166 00:12:09.438 --> 00:12:13.698 not a disruptor to that portion of the industry. 167 00:12:14.268 --> 00:12:19.038 Yeah. No, and I want to definitely touch on AI here because that's been a subject 168 00:12:19.068 --> 00:12:23.508 in a lot of the podcasts this year, especially a lot of the folks that I've got 169 00:12:23.568 --> 00:12:26.207 involved with here on some of these podcasts. 170 00:12:26.297 --> 00:12:28.188 It's definitely something, and I agree with you. 171 00:12:28.608 --> 00:12:33.168 I think it's going to enhance things, make people more efficient, make firms more 172 00:12:33.228 --> 00:12:37.938 efficient. Not so sure it's going to take over a lot of jobs because this is still 173 00:12:38.028 --> 00:12:43.188 a very relationship driven business, no matter how you say it or how you put it. 174 00:12:43.248 --> 00:12:46.308 But I think the interesting thing, you bring up some good points. 175 00:12:48.498 --> 00:12:51.948 You've got a couple different shapes and sizes here in your investments, your 176 00:12:52.008 --> 00:12:53.839 current investments. I just did a podcast. 177 00:12:54.108 --> 00:12:59.598 In fact, it's coming out this Monday coming up, with John Hahn and Tom O'Neill, who 178 00:12:59.689 --> 00:13:05.328 I know forever. Great guy. The first time I did two people at once, and we had a 179 00:13:05.358 --> 00:13:11.178 great time. And it was a lot of that conversation around the AI factor and 180 00:13:11.238 --> 00:13:16.098 some of the things that were going on or have gone on in the marketplace for some 181 00:13:16.128 --> 00:13:21.979 of their peers or competitors that did go after the market in the last year or 18 182 00:13:22.038 --> 00:13:23.928 months. And the things that have happened there. 183 00:13:24.378 --> 00:13:30.108 So you have a business like that who obviously, it used to be when this real 184 00:13:30.168 --> 00:13:32.598 influx of private equity came in 185 00:13:33.888 --> 00:13:39.828 13, 14, 15 years ago, it was a little bit more a decentralized model 186 00:13:40.038 --> 00:13:44.238 that attracted a lot of the sellers. That was attractive to them. 187 00:13:44.538 --> 00:13:48.469 And even the Hilb group started out really decentralized. 188 00:13:48.618 --> 00:13:48.948 Okay. 189 00:13:49.398 --> 00:13:55.008 Very much so. So that wasn't anybody did anything wrong, but it quickly 190 00:13:55.548 --> 00:14:01.068 turned the page towards basically being able to integrate these things because, 191 00:14:01.578 --> 00:14:04.428 like you said, the next investor is looking to see. 192 00:14:04.548 --> 00:14:06.048 Everyone knows you're acquiring. 193 00:14:06.828 --> 00:14:10.548 Everyone knows that's why you get with private equity, to build these national 194 00:14:10.578 --> 00:14:13.668 businesses through acquisition, find talent, et cetera. 195 00:14:13.998 --> 00:14:17.628 Everyone knows you're acquiring, but they want to see that it's working, that 196 00:14:17.689 --> 00:14:20.628 you're integrating it. Not just the systems, but the people. 197 00:14:21.018 --> 00:14:25.458 And meaning the people is the cross-sell, the things that are their expertise, 198 00:14:25.578 --> 00:14:30.348 matching their expertise, selling products to all the customers, which creates the 199 00:14:30.409 --> 00:14:34.518 second big buzz after integration, which is organic growth. Right? 200 00:14:34.909 --> 00:14:39.439 When you look at a business, you're looking to see, number one, if it's working, 201 00:14:39.618 --> 00:14:42.948 putting all these people together, and is it working from an integration 202 00:14:42.979 --> 00:14:46.098 standpoint, but also is it creating that organic growth? 203 00:14:46.488 --> 00:14:50.958 That people are doing more, they're selling more. New business, right? 204 00:14:51.078 --> 00:14:55.969 Not sitting on these renewals, which, the insurance brokerage space, unfortunately, 205 00:14:56.628 --> 00:15:01.729 you could be a very B and C player, like John Hahn said. Okay? 206 00:15:02.028 --> 00:15:04.308 Sit on those renewals for a long time. 207 00:15:04.368 --> 00:15:08.659 You could be a million dollars in revenue for 80 years, and it goes through five 208 00:15:08.689 --> 00:15:13.909 generations of people and still play golf three times a week, pull out a couple 209 00:15:13.939 --> 00:15:19.428 hundred thousand dollars a year, have the same CSRs for 25, 30 years, and it works. 210 00:15:19.518 --> 00:15:23.659 You have breakfast with the hardware store guy and the banker, and that's what 211 00:15:23.719 --> 00:15:25.758 insurance brokerage is traditionally around. 212 00:15:26.118 --> 00:15:28.788 It's the guys that wanted to grow the business. 213 00:15:29.118 --> 00:15:33.469 And the guys that really grew the business on their own got to a point where anyone 214 00:15:33.498 --> 00:15:36.348 that wanted to bring it national, you needed private equity. 215 00:15:36.378 --> 00:15:40.458 You needed the private equity. It was ingenious, and private equity really adapted 216 00:15:40.518 --> 00:15:42.768 to it. So you take a look. You have Epic. 217 00:15:43.428 --> 00:15:48.138 Epic, Galway, which is a combination of the wholesale, the retail, and everything 218 00:15:48.229 --> 00:15:52.578 else, sitting at about $1.8 billion combined according to what they said. 219 00:15:52.909 --> 00:15:57.648 Then you got The Hilb Group, who sits $750 to $800 million. 220 00:15:58.308 --> 00:16:02.839 We've been very involved with that right from day one with Bob and Judd Elliott and 221 00:16:02.868 --> 00:16:07.548 et cetera, and did both of their recaps from Abry, and then bringing you folks in 222 00:16:07.608 --> 00:16:13.578 in the end of '19. All right? And then you look at Jeff's business, Ignite, which 223 00:16:13.638 --> 00:16:19.219 is a little bit smaller than that. But all very different in a little bit 224 00:16:19.729 --> 00:16:23.928 ways. I think Epic and Hilb were a little bit more the same, although Hilb has not 225 00:16:23.988 --> 00:16:28.458 adopted the wholesale side of things. They stayed strict retail. 226 00:16:28.818 --> 00:16:33.589 And then Jeff is pretty much all wholesale. He's niche, and he's the opposite. 227 00:16:33.708 --> 00:16:37.398 So you have all these different assets right now. Okay? 228 00:16:37.518 --> 00:16:39.198 And they're all in different shapes and sizes. 229 00:16:39.258 --> 00:16:44.178 I think the one thing Jeff's done very uniquely to stay at a certain size is when 230 00:16:44.208 --> 00:16:48.138 he gets to a certain size, he sells certain pieces off, which I thought was 231 00:16:48.198 --> 00:16:53.178 ingenious because then he's always going to be able to have one sponsor. Always. 232 00:16:53.418 --> 00:16:57.798 Because right now, what's happened in the market over the last, let's say, 18 233 00:16:57.858 --> 00:17:02.298 months or so, with some of the things that occurred with the Assured Partners folks 234 00:17:02.328 --> 00:17:05.778 and the Risk Strategies folks, you and I talked about this a little bit yesterday. 235 00:17:05.868 --> 00:17:09.288 I think they were a little blindsided by what happened. 236 00:17:09.348 --> 00:17:14.118 They weren't really geared to go public themselves, and they certainly were not 237 00:17:14.689 --> 00:17:17.388 seeking out to sell to a strategic or a public. 238 00:17:17.868 --> 00:17:22.428 But now, as you get to a certain size, you have to be ready for all the options. 239 00:17:23.358 --> 00:17:28.159 With these three, just looking at these three without getting too specific, what do 240 00:17:28.189 --> 00:17:33.768 you see for each of these? Even Hilb, that $800 million, they're not far off from 241 00:17:33.798 --> 00:17:37.878 having to look at their options, that there's going to be one suitor that's going 242 00:17:37.909 --> 00:17:41.178 to be able to take this down if you did do something with it. 243 00:17:41.238 --> 00:17:45.018 How do you view those, just if you had to give me a peripheral view of that? 244 00:17:45.348 --> 00:17:47.659 Yeah. They're all a little different. 245 00:17:48.978 --> 00:17:49.488 Ignite, 246 00:17:50.718 --> 00:17:55.909 or NSM, it's a very 247 00:17:56.089 --> 00:17:58.968 non-traditional private equity 248 00:18:00.678 --> 00:18:04.758 strategy, and I would give a lot of that credit to Jeff. 249 00:18:06.468 --> 00:18:12.348 I think he had built a very well diversified 250 00:18:13.818 --> 00:18:19.188 platform that had a premium value driven by 251 00:18:19.578 --> 00:18:20.478 diversification 252 00:18:21.984 --> 00:18:27.534 But he had a better, I think, sense for the sum of the parts 253 00:18:28.854 --> 00:18:31.104 than most other people looking at it. 254 00:18:32.334 --> 00:18:38.094 And when we invested in that platform with Jeff, it was on a sum of the 255 00:18:38.184 --> 00:18:40.015 parts view 256 00:18:41.244 --> 00:18:42.504 that we could pull off 257 00:18:44.004 --> 00:18:46.854 an exit in the way that you've seen. 258 00:18:46.914 --> 00:18:51.174 There's a very travel-related business left there, and then there's more of a 259 00:18:51.234 --> 00:18:54.114 classic MGA platform in the UK. 260 00:18:55.494 --> 00:18:59.664 And my guess, those give you a little bit of diversification, not nearly to the 261 00:18:59.694 --> 00:19:04.644 extent that we had initially, but those probably look like they exit separately. 262 00:19:04.674 --> 00:19:10.434 And I think Jeff continues to look at ways to add on, build on, and very 263 00:19:10.494 --> 00:19:14.664 strategically. And one of the things that those guys are really good at, 264 00:19:15.984 --> 00:19:21.265 they don't really do tuck-ins or M&A for the sake of scale. 265 00:19:23.394 --> 00:19:24.894 They typically bring 266 00:19:26.244 --> 00:19:31.644 a distribution angle that's new to what they're doing these days and are able to 267 00:19:31.734 --> 00:19:35.844 amp up organic growth of the acquired asset very meaningfully. 268 00:19:36.054 --> 00:19:38.184 They're really, really good operators. 269 00:19:38.244 --> 00:19:41.574 We've been very fortunate to have good operators. They're all good operators. 270 00:19:42.144 --> 00:19:46.794 We've had a great operator in the UK for years and years in Brendan Mannus at PiP, 271 00:19:46.884 --> 00:19:52.794 which is not a market that you've been in necessarily, but we've had a great run 272 00:19:52.854 --> 00:19:54.444 in the UK and now 273 00:19:56.064 --> 00:19:58.854 Western Europe as well on that platform, too. 274 00:19:59.663 --> 00:20:03.414 Well, I think it's interesting. You make some great points because I look at Jeff, 275 00:20:04.044 --> 00:20:08.094 and Jeff was ahead of his time in a couple things, in my opinion. 276 00:20:08.274 --> 00:20:11.424 Number one was marketing. He was a marketing genius. 277 00:20:11.515 --> 00:20:12.324 Like you said, that's 278 00:20:13.584 --> 00:20:17.304 how he's able to drive the organic growth because he knows how to market. 279 00:20:17.934 --> 00:20:22.225 He was niche oriented. And look, several others were very strong with niches. 280 00:20:22.494 --> 00:20:26.904 Mike Christian, when he built Risk Strategies, was around the niche and the riches 281 00:20:26.964 --> 00:20:31.554 in the niches, as they say. But Jeff really was focused and did it on a wholesale 282 00:20:31.614 --> 00:20:36.654 distribution basis on the MGA side because he had such great, and still does, 283 00:20:36.774 --> 00:20:41.874 carrier relations. I think Jeff, of any single principal 284 00:20:42.744 --> 00:20:48.504 owner that I know, probably is closest to the carriers as anybody else I've seen. 285 00:20:48.564 --> 00:20:53.814 We usually don't see, very rarely do you see the main principals, the leaders, the 286 00:20:53.844 --> 00:20:58.314 CEOs that are tied to the carriers as tight as Jeff is. 287 00:20:58.704 --> 00:21:03.384 Jeff's a hands-on guy with the carriers, which helped him develop these programs 288 00:21:03.414 --> 00:21:05.874 and these products, and he's a marketing guru. 289 00:21:06.504 --> 00:21:10.254 And those are the things I think that made what he's done very special. 290 00:21:10.704 --> 00:21:16.434 Hilb, on the other side, Hilb is clearly more of the, like you 291 00:21:16.524 --> 00:21:21.954 said, the classic PE type, but also very classic more of a general 292 00:21:22.344 --> 00:21:27.504 list type broker. They focused on retail. They focused in certain geographies. 293 00:21:27.864 --> 00:21:29.725 They've done a great job of building them. 294 00:21:30.024 --> 00:21:32.994 We've had a huge amount to do with that, okay? 295 00:21:33.265 --> 00:21:35.094 Some of their biggest and best deals and 296 00:21:36.504 --> 00:21:41.515 plenty of their deals. And they stayed focused to what they know and what they're 297 00:21:41.544 --> 00:21:46.254 good at, right? And I think when Ricky came in, he did a very good job of the 298 00:21:46.284 --> 00:21:49.164 integration side of things. That's when it really kicked. 299 00:21:50.304 --> 00:21:51.684 And we obviously 300 00:21:53.544 --> 00:21:59.304 knew what was going on when Ricky came in around Labor Day in '17 with Avery and 301 00:21:59.364 --> 00:22:04.225 Brent and I. And Ricky was coming out of Chubb, right? 302 00:22:04.344 --> 00:22:04.854 He was 303 00:22:06.294 --> 00:22:10.314 number two guy at Chubb, and this was a different ballgame for him. 304 00:22:10.374 --> 00:22:13.944 He was an investment banker dealing with insurance brokers before that. 305 00:22:14.244 --> 00:22:17.214 So this was very interesting to see how he was going to evolve. 306 00:22:17.244 --> 00:22:22.344 But Ricky has done a solid job, okay, putting them in the right direction. 307 00:22:22.554 --> 00:22:27.714 And I do believe that the integration really took over with Ricky and really 308 00:22:27.774 --> 00:22:30.654 probably prospered with Carlyle. Okay? 309 00:22:31.015 --> 00:22:35.154 I think you guys had a lot to do with that, Jim, to be quite honest. 310 00:22:35.153 --> 00:22:37.944 Yeah. First of all, it was a requirement to do the deal. 311 00:22:38.784 --> 00:22:44.184 One of the smart things we did there was we put our then CIO, 312 00:22:44.634 --> 00:22:50.484 Lucia Soares, on the board, and then 100% credit to her and Ricky and 313 00:22:50.515 --> 00:22:55.944 the team. They totally embraced her there, and she really 314 00:22:56.334 --> 00:23:01.314 helped drive a lot of that focus, helped drive the hiring of 315 00:23:02.424 --> 00:23:05.784 the new tech leaders, and helping them lay out a roadmap. 316 00:23:05.844 --> 00:23:11.154 And so look, that's one of the strengths I would tell you of a Carlyle 317 00:23:11.754 --> 00:23:17.574 is we have a lot of resources and capabilities inside the company. 318 00:23:18.475 --> 00:23:22.734 We really look for opportunities where we're not just capital. 319 00:23:24.174 --> 00:23:26.094 I talked a little about being great partners. 320 00:23:27.144 --> 00:23:32.904 But we really look for opportunities where we can help drive the output. 321 00:23:32.994 --> 00:23:35.124 It's not something that we force on 322 00:23:37.254 --> 00:23:40.944 companies necessarily. That's certainly not the model that we use. 323 00:23:41.004 --> 00:23:46.975 It's an opt-in model. And Hilb is a great example, where even beyond our, 324 00:23:47.574 --> 00:23:53.154 I would say, global capabilities from a product 325 00:23:53.184 --> 00:23:53.754 perspective, 326 00:23:55.254 --> 00:24:01.194 they embrace the culture of allowing a Lucia into that shop, taking 327 00:24:01.225 --> 00:24:05.484 the reins as one of their own, not just a board member, not just an owner, and 328 00:24:05.544 --> 00:24:09.414 embracing the execution. And so that's part of why I say when I look at that 329 00:24:09.444 --> 00:24:13.524 platform today relative to the peers, it really is 330 00:24:15.144 --> 00:24:18.954 probably the most integrated PE-controlled platform. 331 00:24:19.164 --> 00:24:24.894 And when you start to overlay AI modeling capabilities across it, 332 00:24:25.164 --> 00:24:27.204 all the data is clean. I remember 333 00:24:31.584 --> 00:24:35.814 we were looking at one point of potentially doing an MLE with that with a bit of a 334 00:24:35.874 --> 00:24:40.884 larger organization. I won't mention their name, but they've since been acquired. 335 00:24:43.074 --> 00:24:46.044 And we both referred to ourselves as integrated. 336 00:24:47.813 --> 00:24:49.975 I think we're on the same operating platform. 337 00:24:51.594 --> 00:24:55.104 Feeding our data lake, we had three feeds into our data lake. 338 00:24:55.794 --> 00:25:00.414 Hilb, and the last two acquisitions that we had announced and had yet to integrate 339 00:25:00.475 --> 00:25:01.374 within 30 days. 340 00:25:02.934 --> 00:25:05.454 The target organization said, "Well, yeah, we're fully integrated too. 341 00:25:05.515 --> 00:25:10.794 We've got a single data lake, 140 342 00:25:10.884 --> 00:25:16.374 inputs." So in other words, there were 140 different systems that they were having 343 00:25:16.434 --> 00:25:18.714 to feed into a centralized data lake. 344 00:25:18.774 --> 00:25:24.504 So you can imagine the quality of the data versus I've got 99 and a half percent of 345 00:25:24.594 --> 00:25:29.874 all of my lead coming from a single platform, and then just happens to be these 346 00:25:29.934 --> 00:25:32.184 last two deals that I have yet to put on. 347 00:25:32.424 --> 00:25:36.444 So very different definition in integration. 348 00:25:37.165 --> 00:25:39.984 Well, data is everything, right? When it comes to- 349 00:25:40.044 --> 00:25:43.284 Data. That's one thing AI teaches you, is data is absolutely. 350 00:25:43.404 --> 00:25:46.704 If you don't have clean, centralized data, you don't have much. 351 00:25:47.364 --> 00:25:52.225 Yeah. Well, you'll find out that you'll never get another really good investor in, 352 00:25:52.284 --> 00:25:53.995 especially at that size, without- 353 00:25:54.234 --> 00:25:54.384 No 354 00:25:54.833 --> 00:25:57.954 ... the clean data. It's all part of the integration process. 355 00:25:58.434 --> 00:26:02.544 It's all part of everything making working, all this acquisition flurry. 356 00:26:02.934 --> 00:26:06.144 And Hilb's been very disciplined on what they've acquired. 357 00:26:06.234 --> 00:26:10.734 We've done a bunch of their deals, and I know their appetite, obviously. 358 00:26:10.764 --> 00:26:15.834 And I'm the only non-employee shareholder left, right? 359 00:26:16.314 --> 00:26:17.215 You made it right. 360 00:26:17.605 --> 00:26:23.424 I am. It's a definite. My partner, Mike Fletcher, when we brought you in, he took 361 00:26:23.484 --> 00:26:26.484 his money out. I left my money in. I've never touched my money- 362 00:26:26.754 --> 00:26:26.844 Yeah 363 00:26:26.903 --> 00:26:31.465 ... in the Hilb Group, and I'm happy that I did so because I think there's a lot of 364 00:26:31.495 --> 00:26:36.204 value there. And I agree with you. I think Hilb, at their size and scale, is 365 00:26:36.264 --> 00:26:38.965 probably a little too small to go public. 366 00:26:38.995 --> 00:26:42.204 And I think if you're going to go public, you've got to prepare to go public. 367 00:26:42.654 --> 00:26:44.274 That's not like you put the switch on. 368 00:26:44.484 --> 00:26:48.054 There's things you have to do, and I think they've been very disciplined. 369 00:26:48.084 --> 00:26:52.614 And it may take a few years, and I don't think that's their game plan, but they're 370 00:26:52.644 --> 00:26:57.264 probably still at the scale that they could attract one more sponsor if you guys 371 00:26:57.294 --> 00:27:02.274 ever decided to exit or stay involved in a meaningful 372 00:27:02.694 --> 00:27:05.605 capacity. But they would need someone like you again. 373 00:27:05.754 --> 00:27:09.564 They would need someone of your size and scale, and there's not that many out 374 00:27:09.624 --> 00:27:15.564 there. A shop that's generating $250 million or $300 million of EBITDA, 375 00:27:15.715 --> 00:27:18.984 give or take, that can take that on singularly. 376 00:27:19.434 --> 00:27:23.154 And that's the thing that I think has really been the eye-opener for a lot of 377 00:27:23.154 --> 00:27:27.415 what's happened in the last 18 months, where people went out even bigger than Hilb, 378 00:27:27.774 --> 00:27:32.514 which probably should've been considering what everyone uses the big buzzword now, 379 00:27:32.605 --> 00:27:34.734 optionality. Their optionality. 380 00:27:34.794 --> 00:27:38.094 Because I think people are going to learn from what happened to some of the 381 00:27:38.394 --> 00:27:42.355 transactions that have happened over time, and they're going to know that they have 382 00:27:42.384 --> 00:27:46.986 to be prepared to address every option. Okay? And they're limited. 383 00:27:47.076 --> 00:27:50.197 As you get bigger, the options are limited. Okay? Oh, 384 00:27:50.316 --> 00:27:52.086 yeah. They're definitely limited, okay? 385 00:27:52.236 --> 00:27:52.386 So- 386 00:27:52.536 --> 00:27:57.696 Yeah. You're saying a couple of things when you talked about when PE first came 387 00:27:57.726 --> 00:28:00.006 into this industry in a more decentralized model. 388 00:28:00.096 --> 00:28:02.556 I think it's still a 389 00:28:04.386 --> 00:28:09.636 baby doll place for PE to invest. It's because of the attributes that we talked 390 00:28:09.696 --> 00:28:11.646 about with retention and 391 00:28:13.116 --> 00:28:18.187 cycle agnostic and it lags typically, right? I'm sorry, inflation. 392 00:28:19.687 --> 00:28:22.146 So all of those attributes are still there. 393 00:28:22.207 --> 00:28:27.696 Where capital has gotten smarter and this industry's gotten more 394 00:28:27.756 --> 00:28:33.635 competitive, it is that full integration platform is an absolute must today. 395 00:28:35.796 --> 00:28:39.996 You touched on it a bit earlier. Organic growth isn't really the second thing, it's 396 00:28:40.056 --> 00:28:41.526 everything, right? And so 397 00:28:45.606 --> 00:28:50.466 your M&A strategy today, it can be opening up geos, but really you've got to be 398 00:28:50.556 --> 00:28:51.036 able to 399 00:28:54.546 --> 00:28:58.716 change the organic-- not change the organic, but enhance the organic growth rate of 400 00:28:58.746 --> 00:29:03.067 that acquired asset. So if that acquired asset's coming in with 3% or 4% organic 401 00:29:03.127 --> 00:29:07.596 growth through cross-sales, through more capabilities, through better products, 402 00:29:07.656 --> 00:29:13.356 through digital leads, whatever that is, you need to be able to add 100, 200, 403 00:29:13.687 --> 00:29:16.266 250 basis points of organic growth into that. 404 00:29:16.596 --> 00:29:21.725 That's what really will generate and create wealth and value and franchise value 405 00:29:21.815 --> 00:29:27.127 over time. It's more difficult today, as you can imagine, than it was 15 years ago. 406 00:29:30.396 --> 00:29:32.496 Financing rates are higher. 407 00:29:33.726 --> 00:29:38.466 Organic growth is currently in a soft market. It's a bit more of a challenge. 408 00:29:39.937 --> 00:29:45.486 When I look at our platforms, I will tell you, I'm very proud of the new 409 00:29:45.576 --> 00:29:49.596 sales. When you look at the top-line organic growth, is it what it has been in the 410 00:29:49.596 --> 00:29:53.256 past? Not this market. It looks like the public's, right? 411 00:29:53.466 --> 00:29:53.556 Yeah. 412 00:29:55.416 --> 00:29:57.606 I won't pick on Brown & Brown, but it looks better than that. 413 00:29:57.666 --> 00:29:57.906 But 414 00:30:00.006 --> 00:30:04.266 I also am building a bigger back book, and so I know when the market flattens out 415 00:30:04.296 --> 00:30:07.506 or it begins to harden again, I'm going to catch that tail end, right? 416 00:30:07.567 --> 00:30:12.096 So I don't worry about this kind of interim where organic growth is a little bit 417 00:30:12.156 --> 00:30:17.916 slower. And the multiple arbitrage is tighter than it was 15, 16 418 00:30:17.946 --> 00:30:20.226 years ago. And some of that's your fault. 419 00:30:21.786 --> 00:30:22.207 Probably. 420 00:30:23.377 --> 00:30:27.606 And so all of that conspires to make you, you've got to be, if you're going 421 00:30:27.665 --> 00:30:31.207 to invest in the space, smarter about it, to be honest. 422 00:30:33.336 --> 00:30:35.166 You're talking about what it takes to go public. 423 00:30:35.256 --> 00:30:41.166 You've got to think about what do I want to be when I grow up every day, and am 424 00:30:41.256 --> 00:30:46.986 I marching towards that? And that really needs to look like a singular 425 00:30:47.466 --> 00:30:51.726 organization with an outstanding culture and strong organic growth. 426 00:30:51.906 --> 00:30:57.817 Yes, you need M&A capabilities as well, but strong organic growth is what people 427 00:30:57.875 --> 00:31:00.096 pay for, is what drives great organizations. 428 00:31:00.545 --> 00:31:06.067 Well, what hasn't happened yet, and possibly could, with some of these brokers like 429 00:31:06.127 --> 00:31:10.986 a Hilb of that size scale or a billion, there's a few that are a billion, a little 430 00:31:11.106 --> 00:31:16.656 over a billion. What hasn't happened yet is anybody combining to combine 431 00:31:16.716 --> 00:31:21.877 forces for a couple of years and try to take it public, okay, rather than try to 432 00:31:21.937 --> 00:31:27.006 take it public themselves. And I think there's people thinking about that. 433 00:31:27.067 --> 00:31:32.946 We have other investments that are size and scale that 434 00:31:33.187 --> 00:31:37.386 are really gearing up to see if they can go public and kind of ratcheted back on 435 00:31:37.416 --> 00:31:42.817 the M&A right now in order to focus on the things you need to do to become public, 436 00:31:42.877 --> 00:31:46.656 which is like you said, the organic growth has got to be, it's everything, right? 437 00:31:46.687 --> 00:31:49.687 The integration is everything, and obviously the leverage. 438 00:31:49.986 --> 00:31:53.646 You got to be at a certain leverage point to even be considered from a compliance 439 00:31:53.677 --> 00:31:59.586 standpoint. So all these things factor in, but I'm waiting to see if any of 440 00:31:59.616 --> 00:32:02.166 those things. I'd love to be on the front end of one of them. 441 00:32:02.526 --> 00:32:08.016 Having a lot of these things that we've done over the years here, we have been 442 00:32:08.076 --> 00:32:11.196 innovative, but it's really interesting out there. 443 00:32:11.346 --> 00:32:13.116 There's a lot in the industry right, going on. 444 00:32:13.177 --> 00:32:17.377 We just saw USI and Aon come together. 445 00:32:17.466 --> 00:32:20.856 So that's a great print. I think that's a great print for 446 00:32:22.627 --> 00:32:27.067 the industry. You saw, I think, the Baldwin 447 00:32:28.177 --> 00:32:28.627 deal. 448 00:32:30.187 --> 00:32:33.036 If you're paying attention, I think that should be a real eye-opener. 449 00:32:34.957 --> 00:32:36.966 The combination of the Bell family and 450 00:32:38.196 --> 00:32:39.786 VC investors in this sequence 451 00:32:41.616 --> 00:32:46.866 of partnership, that to me, really, those are my sets. 452 00:32:47.377 --> 00:32:52.116 And I've had some brief conversations with them and cocktail party conversation in 453 00:32:52.146 --> 00:32:52.746 what they're doing. 454 00:32:54.096 --> 00:32:59.586 Those guys are AI savvy, and I look at that as an 455 00:32:59.646 --> 00:33:03.696 endorsement of this is going to be an industry that's going to 456 00:33:06.336 --> 00:33:12.156 build off of and be strengthened by AI versus intermediated and disrupted by 457 00:33:12.246 --> 00:33:15.366 AI. So I think that's a very interesting 458 00:33:17.526 --> 00:33:20.766 deal that I think-- And Trevor, you know Trevor, he's 459 00:33:22.746 --> 00:33:28.536 cutting edge in this industry. When you look at his platform, the things he's 460 00:33:28.567 --> 00:33:34.326 doing, very few others are doing. Leading edge in a lot of ways, and probably 461 00:33:34.896 --> 00:33:37.026 very well-suited to 462 00:33:38.796 --> 00:33:43.687 benefit from AI. So I think that'll be a partnership to watch. 463 00:33:44.377 --> 00:33:47.106 Well, I was just going to say, you took the words out of my mouth. 464 00:33:48.006 --> 00:33:51.036 What do you think about the USI Aon transaction? 465 00:33:51.096 --> 00:33:55.446 I think that's going to help you with some of the investments you have. 466 00:33:55.536 --> 00:34:01.056 I think that where people were kind of skittish the last eight months, nine months 467 00:34:01.116 --> 00:34:05.196 to a year because of the public's trading at all-time lows. 468 00:34:05.286 --> 00:34:09.067 I had Gallagher on, I had Powell Brown on. Okay. 469 00:34:09.516 --> 00:34:14.797 And then Pat came out and said, "Our stock was at 350, now it's at 220. 470 00:34:14.856 --> 00:34:17.886 Jump on the wagon, everybody, because it will come back." And he's right. 471 00:34:18.185 --> 00:34:23.976 So there are cycles and whatnot. But you saw the Aon USI transaction, 472 00:34:24.457 --> 00:34:26.317 which was very significant. 473 00:34:27.756 --> 00:34:32.646 I think it helped some of the investments that you have in others, okay, that are 474 00:34:32.677 --> 00:34:34.026 getting to a certain scale. 475 00:34:35.286 --> 00:34:40.896 And yes, I agree. Traditionally, both family office and 476 00:34:40.986 --> 00:34:44.856 VC have not really worked in this space, right? 477 00:34:44.946 --> 00:34:48.877 VC never really, I'm not sure they really tried that hard. 478 00:34:50.136 --> 00:34:55.716 To tell you something, they came at it from a different direction than what I was 479 00:34:55.776 --> 00:34:57.067 referring to with Baldwin. 480 00:34:57.606 --> 00:34:57.726 Right. 481 00:34:57.756 --> 00:34:59.766 They came at it from a disruptor perspective. 482 00:35:00.547 --> 00:35:00.666 Right. 483 00:35:01.206 --> 00:35:03.547 One of the things I think AI will bring, right, is 484 00:35:03.576 --> 00:35:07.896 there'll be less 485 00:35:09.186 --> 00:35:09.756 need 486 00:35:11.466 --> 00:35:13.116 for you to have a massive IQ, 487 00:35:14.677 --> 00:35:20.196 and more value in EQ. Which, by the way, this industry and wealth, 488 00:35:21.126 --> 00:35:24.427 I think both very much lead themselves. They're relationship businesses. 489 00:35:24.486 --> 00:35:27.366 So the EQ piece was always a big piece of it. 490 00:35:27.366 --> 00:35:27.817 But 491 00:35:29.196 --> 00:35:35.136 IQ is going to become a commodity through AI, and EQ is going 492 00:35:35.166 --> 00:35:39.096 to become more and more critically important, I think, in these industries. 493 00:35:39.126 --> 00:35:44.946 And so I think when you think about AI and where you can ultimately go with 494 00:35:45.006 --> 00:35:50.677 this, it's probably easier to develop the best salespeople and 495 00:35:50.736 --> 00:35:51.427 service people 496 00:35:52.716 --> 00:35:58.236 that may not have necessarily understood the industry at the level that you would 497 00:35:58.236 --> 00:35:59.976 have liked them to have in the past. 498 00:36:00.156 --> 00:36:05.346 We're not going to necessarily have to rely on that type of intelligence anymore. 499 00:36:05.436 --> 00:36:09.756 That will be at their fingertips. It'll be on their phone, on their computer, an 500 00:36:09.846 --> 00:36:14.496 agent in their ear. I tell people in this space, in wealth as well, AI is not going 501 00:36:14.526 --> 00:36:17.406 to take your job. You're going to go to work for AI. 502 00:36:17.556 --> 00:36:19.056 It's going to be telling you what to do. 503 00:36:19.266 --> 00:36:21.186 It's going to be laying out your day for you. 504 00:36:21.216 --> 00:36:26.766 It's going to be telling you which renewals are coming up, who's at risk, who do I 505 00:36:26.797 --> 00:36:32.166 need to go out and see, and here's my five different leads that came in overnight, 506 00:36:32.466 --> 00:36:36.276 and I'm not going to route them necessarily to the first person in the office. 507 00:36:36.336 --> 00:36:40.806 I'm going to route them based on the characteristics of the lead as to who has the 508 00:36:40.866 --> 00:36:44.677 highest propensity to actually close that deal because I'm able to track that down 509 00:36:44.706 --> 00:36:50.616 at internal. I mean, the capability, the possibilities of the way that you can 510 00:36:50.677 --> 00:36:54.547 actually manage your pipeline, manage your people through these resources if you 511 00:36:54.606 --> 00:36:58.794 have the data. It really is limited by your 512 00:36:59.934 --> 00:37:05.514 imagination as to what you can have done with it. So I think all of that is coming. 513 00:37:05.694 --> 00:37:11.454 It's coming quickly, and I think the guys that are best positioned to 514 00:37:11.574 --> 00:37:17.094 utilize that and do that, they're going to enjoy higher organic growth, certainly 515 00:37:17.154 --> 00:37:23.094 for the short shot. Ultimately, it'll become a bit more commoditized, 516 00:37:23.124 --> 00:37:24.534 and other folks will be able to catch up. 517 00:37:24.594 --> 00:37:29.605 But I'm really excited for this industry and what I think AI is going to bring to 518 00:37:29.605 --> 00:37:29.694 it. 519 00:37:30.474 --> 00:37:30.804 Yeah, no, 520 00:37:32.244 --> 00:37:34.554 very well said. I couldn't have said it better. 521 00:37:35.424 --> 00:37:39.144 I agree with everything you're saying. I think it's going to do a lot. 522 00:37:39.234 --> 00:37:41.634 It's going to create tremendous efficiencies. 523 00:37:42.894 --> 00:37:47.244 I also think it's going to help from a marketing perspective for a lot of these 524 00:37:47.275 --> 00:37:52.704 producers. Okay. Everybody strives for more inbound calling, right? Okay. 525 00:37:52.794 --> 00:37:58.044 That's the real trick. We do. And what we do, we spend a ton of money on marketing 526 00:37:58.105 --> 00:38:01.674 every year, and it's paying off in a lot of ways. 527 00:38:01.704 --> 00:38:07.284 In fact, we're getting other industries where they're going on ChatGPT and saying, 528 00:38:07.314 --> 00:38:10.914 "Who's the best advisor for us outside of insurance brokerage?" And people are 529 00:38:10.974 --> 00:38:15.804 calling us. "You come up as the best advisor for this and this and this." And I'm 530 00:38:15.834 --> 00:38:19.494 very candid with everyone, not that we can't do other industries because the model 531 00:38:19.554 --> 00:38:24.355 that we have is set up to do any industry as long as we know the market and know 532 00:38:24.384 --> 00:38:29.154 what's going on. But that kind of stuff is coming up for us, and we're not even 533 00:38:29.184 --> 00:38:33.564 looking for it. Okay. Which is pretty wild in its own right. 534 00:38:33.624 --> 00:38:38.664 And it's flattering because I guess all this hard work has paid off that we're 535 00:38:38.694 --> 00:38:42.114 pretty well respected and worked hard to get there. 536 00:38:42.204 --> 00:38:45.084 But I can't agree with you more about AI. 537 00:38:45.204 --> 00:38:48.144 I think everybody has the same view of it. 538 00:38:48.444 --> 00:38:50.484 I don't think it's going to take jobs away. 539 00:38:50.994 --> 00:38:54.894 There may be a few that go here and there because you don't need certain things, 540 00:38:54.984 --> 00:38:59.064 but I think it's a total enhancer, and you've got to be set up, ready for it. 541 00:38:59.094 --> 00:39:02.934 And like you said, the data is critical, right? 542 00:39:03.864 --> 00:39:07.404 When it all comes down to it, you have to have the data, right? 543 00:39:07.525 --> 00:39:11.994 You have to have the data in place. You have to have things and systems in place, 544 00:39:12.084 --> 00:39:16.824 and that's what everyone's striving for in an industry that traditionally has been 545 00:39:16.884 --> 00:39:20.034 backwards or behind in technology. 546 00:39:20.184 --> 00:39:24.714 Yep, and communicating back and forth with your carrier is still pretty archaic in 547 00:39:24.775 --> 00:39:25.284 this space. 548 00:39:27.924 --> 00:39:29.514 It's one of the big weaknesses I see. 549 00:39:29.964 --> 00:39:34.764 And Jim, the funny thing is what we do, and we're advisors first. 550 00:39:34.884 --> 00:39:38.874 I tell everybody that. Nobody that hires us commits to selling their business, 551 00:39:38.964 --> 00:39:43.884 although you get called business broker, all kinds of stuff, people don't really 552 00:39:43.914 --> 00:39:48.294 understand what you're doing. But it's amazing to me, okay, 553 00:39:49.494 --> 00:39:54.954 how many people that come into this really don't necessarily all 554 00:39:55.014 --> 00:40:00.684 understand it. They come to you, every third person now in the last 10 years that 555 00:40:00.714 --> 00:40:05.424 we talked to, has the best technology. And I said, "That's fantastic. 556 00:40:05.844 --> 00:40:10.283 People offer me $30 million for this technology." I said, "Did you do it?" "Well, 557 00:40:10.404 --> 00:40:14.514 no." I said, "Why?" "Well, it's still developing." So what I say to everyone is, 558 00:40:15.084 --> 00:40:18.654 "Well, is it working on your own business?" And they say, "Well, it's getting 559 00:40:18.714 --> 00:40:24.084 there." I say, "Well, how? How if it's not working on your own business, can we 560 00:40:24.144 --> 00:40:27.204 promote that to anyone else?" It's very naive. 561 00:40:27.264 --> 00:40:31.044 You got a bunch of insurance brokers that all of a sudden think they're technology 562 00:40:31.105 --> 00:40:37.044 guys. But listen, I think AI, it's not a threat like everybody made it out to be. 563 00:40:38.424 --> 00:40:43.254 I think it's going to be an enhancer and handled properly and so on and so forth. 564 00:40:43.314 --> 00:40:47.605 And like you said, it's going to eliminate people having to be a high IQ. 565 00:40:47.694 --> 00:40:49.164 I like that. I'm going to use that. 566 00:40:50.574 --> 00:40:54.474 Because it's going to eliminate people having to think too much. Right? 567 00:40:54.564 --> 00:40:58.434 Well, I do think we're not there. But 568 00:40:59.784 --> 00:41:01.855 I think it starts to change 569 00:41:03.324 --> 00:41:08.454 the characteristics that you'll place value on in an employee. 570 00:41:10.284 --> 00:41:16.194 You see what I mean? There'll be softer attributes that 571 00:41:16.224 --> 00:41:21.954 I'm never going to get from AI. And I'm not going to find people smarter than 572 00:41:22.014 --> 00:41:27.474 AI. So what I want are those softer attributes that are able to 573 00:41:28.164 --> 00:41:32.484 utilize AI. That's power. That's a powerful employee. 574 00:41:33.474 --> 00:41:35.724 It's got to be a balance. You got to use it for what it is. 575 00:41:35.754 --> 00:41:39.534 Some people are doing all their emails already through AI, and you could see it. 576 00:41:39.594 --> 00:41:43.704 You could understand it. I'm not sure that's the right way to go. Okay? 577 00:41:44.034 --> 00:41:46.314 I think it's got to be a balance of both. 578 00:41:46.464 --> 00:41:50.784 And I think the people that perfect that will really be able to leverage it. 579 00:41:51.174 --> 00:41:53.874 Yeah. No, it's having people that can 580 00:41:55.764 --> 00:42:00.564 identify an issue and utilize AI to solve the issue. 581 00:42:01.554 --> 00:42:03.654 That's where the power, I think, is going to be. 582 00:42:03.714 --> 00:42:03.834 And 583 00:42:06.264 --> 00:42:11.275 their job, by the way, I think is a far better, more enjoyable, 584 00:42:13.105 --> 00:42:16.105 pleasant job in the future because of it, right? 585 00:42:16.194 --> 00:42:21.355 Because the mundane stuff that you get caught with, and in this phase can be 586 00:42:22.105 --> 00:42:22.614 keying 587 00:42:24.054 --> 00:42:26.574 policies in, right, twice. 588 00:42:27.954 --> 00:42:30.684 All that's gone. All that is being done. 589 00:42:31.704 --> 00:42:37.344 And so you're much more freed up as a service provider in solving issues for your 590 00:42:37.374 --> 00:42:37.914 customers. 591 00:42:38.304 --> 00:42:41.964 Well, listen, Jim, I think this has been terrific. 592 00:42:43.194 --> 00:42:45.775 I think I covered pretty much everything I wanted to. 593 00:42:45.834 --> 00:42:49.014 If there's anything else you'd like to cover, let's please do so. 594 00:42:49.105 --> 00:42:54.684 But this was outstanding. I hope that both you and I continue to do great things in 595 00:42:54.714 --> 00:42:58.254 this space together with Sica | Fletcher & Carlyle. 596 00:42:58.494 --> 00:43:04.164 I've been honored to have you on today, and I thought you did a fantastic job, and 597 00:43:04.224 --> 00:43:05.664 thank you for joining. 598 00:43:05.994 --> 00:43:09.534 Well, thanks. I appreciate the invite. It was a lot of fun, and good to see you. 599 00:43:10.374 --> 00:43:12.834 Awesome to see you. Thanks again. 600 00:43:13.404 --> 00:43:13.914 Yes, sir. 601 00:43:14.934 --> 00:43:18.414 For more information about your unique situation, please contact Sica | 602 00:43:18.474 --> 00:43:22.374 Fletcher or visit us at www.sicafletcher.com. 603 00:43:23.574 --> 00:43:27.654 All opinions expressed by the host and guests are their own and are not necessarily 604 00:43:27.714 --> 00:43:31.944 those of Sica | Fletcher. This podcast is for informational purposes only. 605 00:43:32.244 --> 00:43:35.484 It should not be relied upon as professional advice. Sica | 606 00:43:35.574 --> 00:43:39.054 Fletcher employees and clients may have positions in the firms discussed in this 607 00:43:39.084 --> 00:43:44.275 podcast. Any information provided is subject to change and does not constitute an 608 00:43:44.364 --> 00:43:47.904 offer to purchase or sell any financial product. Sica | 609 00:43:47.934 --> 00:43:53.124 Fletcher LLC does not underwrite securities, nor advise on, nor affect transactions 610 00:43:53.184 --> 00:43:55.134 and securities for the account of others.