Crystal & Company
Best Insurance Procurement Initiatives
Crystal & Company M&A procurement platform increases private equity returns and allows firms to better ensure compliance with evolving SEC guidelines. We spoke to them to find out more about their unique service.
Crystal & Company is a leading strategic risk and insurance advisor, addressing clients’ risk management, insurance brokerage, and employee benefits consulting needs. The firm is comprised of more than 400 professionals, each distinguished by their technical expertise and industry-specific knowledge, and driven by their passion for client service. Crystal & Company is headquartered in New York with 10 regional offices throughout the country, placing over $1 billion in premiums annually in the global insurance marketplace. Established in 1933, the company has sustained its independence through 80 years and three generations of Crystal family ownership and management.
Crystal & Company’s Mergers & Acquisitions Group led by Jonathan Gilbert, Senior Managing Director, is dedicated to addressing the changing risks, evolving exposures, regulatory environment, and client demands within the private equity sector. With increased oversight by the US Securities and Exchange Commission (SEC), the private equity community has to carefully approach programs leveraging the buying power of portfolio companies.
Since insurance often represents one of the highest business expenses outside of payroll, private equity firms are always looking for ways to drive down cost. A common approach to address this has been to develop shared property and liability insurance programs across all portfolio companies. While this approach can be effective at driving down costs, it raises the following concerns:
1. Limits of one company could erode coverage for another company
2. Diverse industry class of portfolio companies makes it difficult to find an equally diverse underwriting appetite
3. Buyers might seek an adjustment to purchase price based on loss of economies of scale and raise concerns over any potentially impaired limits and diminished insurance asset
4. Allocation of costs methodology may not have been disclosed with all shareholders involved
Crystal & Company has developed a proprietary approach to create a portal for private equity owned companies to achieve substantial buying power while avoiding issues raised above. They have centralized the placement of insurance through a procurement hub in New York, thereby placing a significant amount of insurance placements with local insurance carriers. This allows the team to work with insurance carriers to deliver competitive premium rates, improved terms and conditions, and increased leverage in contentious claim situations.
Company: Crystal & Company