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Best's News Service via Bestwire - October 21, 2016 02:36 PM

Joint Committee Exploring Possible AAMGA, NAPSLO Merger

WASHINGTON - Merger talks have been launched between the American Association of Managing General Agents and the National Association of Professional Surplus Lines Offices over the viability of joining the two trade groups into one overarching association, officials said.

A joint committee has been formed to discuss the idea, with the possibility of putting it to a vote with each group’s membership sometime next year, Brady Kelley, NAPSLO executive director, told Best’s News Service.

“The committee’s job will be to evaluate what a new organization should look like, how it should be governed and how it should function,” Kelley said, “not only drawing from the best of each organization but also defining what will create the greatest value for each constituency within our memberships.”

The 10-member committee will have the job of determining whether such a merger will work, Bernd Heinze, AAMGA executive director, told Best’s News Service.

“The committee’s focus will be to examine the organizational dynamics and differentiating, foundational functions each association provides to its members and the industry, explore areas of opportunity to ascertain whether members are receiving the greatest value and examine whether greater efficiencies can be achieved with a single, combined entity,” he said.

Any recommendations would go to a vote by the memberships of both organizations. In the event a merger of the entities is a recommendation, a bylaw amendment would need to be approved by 75% of AAMGA members voting on the issue, Heinze said.

Timing is fluid. The committee anticipates updating the proposal at NAPSLO’s Mid-Year Leadership Forum in March 2017 and the AAMGA’s Annual Meeting in May 2017, where committee members will gather feedback before a proposal goes to a vote, Kelley said. The committee is comprised of four members from each association board and an AAMGA associate/NAPSLO company member, officials said.

The two associations have long partnered to provide services for members, according to a letter sent to the membership by Ed Levy, AAMGA president, and Dave Leonard, NAPSLO president. There may be economies of scale in a formal combination, the letter said.

“Our primary focus is to add value in today’s environment by serving the AAMGA and NAPSLO membership as efficiently and as economically as possible,” the letter said. “A thoughtful consolidation can do exactly that, without diminishing the strengths of our relationships and membership resources.

“The synergy of the AAMGA and NAPSLO, together serving the entirety of the wholesale insurance marketplace, is a common sense opportunity neither organization can afford to ignore,” the letter said.

Memberships overlap, Heinze said.

“Any issues on integration, if warranted, will need to be revisited after any recommendations and votes to proceed are secured,” Heinze said.

A merged association could arise with a new name and a new branding strategy, Heinze said.

“Any issues pertaining to a new name will need to be revisited after any recommendations and votes to proceed are secured,” Heinze said. “However, it is contemplated that a possible new entity would also have a new name and branding.”

AAMGA this year launched new education and certification initiatives aimed at creating a wholesale sector that better identifies risks and sets its own course, rather than responding to the larger insurance market (Best’s News Service, May 27, 2016).

In September, Kelley noted last year’s continued rise in premiums for the surplus lines sector drove business activity among wholesale insurance brokers and surplus lines carriers and boosted attendance to record levels at the NAPSLO conference in Atlanta (Best’s News Service, Sept. 27, 2016).

Founded in 1926, AAMGA is the trade association for international wholesale insurance professionals, according to the AAMGA website. Membership includes managing general agents, managing general underwriters, program administrators and managers, aggregators and brokers, Heinze said.

Established in 1975, NAPSLO represents the surplus lines industry, according to its website.

For 2015, surplus lines premium volume was $41 billion, which represented a 2.5% increase from the previous year, measured by direct premiums written, according to a September A.M. Best special report. The surplus lines market is financially sound and should remain so for the foreseeable future, the report said.

(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)

BN-NJ-10-21-2016 1436 ET #

Related News: Mergers And Acquisitions, Surplus Lines, Managing General Agent

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