Case Studies

Case #10: A Nearly 200-Year-Old Agency Takes Steps to Preserve Its Independence


SummaryChase, Clarke, Stewart & Fontana, one of the oldest and largest insurance agencies in Springfield, Massachusetts, faced a dilemma: how to stay independent when two of its partners were retiring. Could the agency afford to buy out both partners at the same time? As it turns out, it could, thanks to timely financing from InsurBanc, a division of Connecticut Community Bank NA.


Chase, Clarke, Stewart & Fontana is a full-service insurance agency in Springfield, Massachusetts, with a history that dates back to 1827. Over the years, CCSF has grown through the acquisition of smaller local agencies, always keeping its roots in the community and maintaining its independence.

In 2017, CCSF found itself at a crossroads. Two of its five partners were nearing the agency’s mandatory retirement age of 66, and CCSF’s bylaws required that they retire their shares in the company.

As partner Ray Lukas explains, “We had been able to buy out retiring partners before, either through bank financing or an internal buyout, but we had never been faced with two retirements. We weren’t sure we could do it. How would we handle the partners’ clients, and could we afford to do a buyout?”

At the same time, CCSF knew there were large national brokerages which expressed interest in purchasing smaller agencies, and the multiples were attractive. While selling to a larger firm would allow the partners to maximize their earnings, CCSF also wanted to explore options that could keep the agency independent.

Prior to starting his own agency, which merged with CCSF in 2004, Lukas worked for a large financial services company in Boston. “I knew what it was like to work in a cubicle, where the only thing that matters are the numbers, you don’t have an identity and you aren’t in control of your destiny,” he says. “That weighed on my mind as we discussed the agency’s future.”

In the end, CCSF was able to come up with a perpetuation plan that was favorable to everyone involved. “We raised the acquisition price for an internal buyout to make it more appealing for the retiring partners, plus we offered a two-year brokerage agreement,” Lukas says. “Then we set out to see if we could get the financing.”


‘InsurBanc spoke our language’

Lukas turned right away to InsurBanc. “I had always heard good things about InsurBanc,” he says. “I felt with a commercial lender I’d be spending a lot of time explaining the basics of the insurance business, so I thought InsurBanc was the right place to start.

“From day one, it was just what I thought,” he continues. “InsurBanc knew our business model. They spoke our language, and they saw how our cash flow could generate the funds to pay off the loan. They made it easy and responded in a very timely manner.

Scott Freiday, vice president and commercial team leader at InsurBanc, says that once the remaining owners decided they wanted to remain independent, “The loan needed to be underwritten quickly to show the retiring principals that capital was available. This is what we do every day, allowing agencies to maintain an independent legacy rather than selling out to one of the larger brokers. Our extensive knowledge of the agency business permits us to deliver solutions with a minimum of fuss. It’s also a credit to Ray, who was able to readily provide all the information we needed to do our due diligence.”

“InsurBanc showed us how we could do the financing and remain independent,” Lukas adds. “It stepped up with enough funding for both buyouts, although we only needed it for one since we funded the other one internally. I am certain that if we had used a commercial bank, the process would have taken longer. InsurBanc really understands how agencies work.”


Perpetuating a legacy

Remaining independent preserved CCSF’s rich history and its close ties to the community. CCSF has been continuously located in downtown Springfield since its inception in 1827. CCSF employees are active on boards and volunteer in local charitable organizations, and the agency sponsors community events and scholarships for local students each year.

“Lifestyle was my number one reason for wanting to remain independent,” says Lukas. “Eventually you figure out what’s important in life. The money and stress aren’t worth it compared to the freedom and flexibility that comes with owning an independent agency. The satisfaction of building a team and growing an organization outweighs the ‘big money’ of selling to a national broker.”

Lukas and his partners see a bright future for CCSF. Once the agency has emerged from its current transition, he hopes to convince a few other independent agents in the area to join the firm as he did. “I’d like to think that we could grow through acquisition and help out some other agents who are solo and may benefit from being part of our organization. We hope to be there for them in the years ahead.”

Case #7: At Roger Keith & Sons, the Family Agency Still Grows Strong in 5th Generation

Summary: From its start in 1869, Roger Keith and Sons is now in its fifth generation of ownership. Yet this suburban Boston independent agency does not rest on its laurels from years gone by: It responds to market forces and uses keen financial and agency management to generate new growth. Today its leadership team combines organic growth, acquisitions, and a niche for sustained success – with the help of a bank that specializes in helping agencies.

Success brings longevity. But longevity brings unprecedented challenges unheard of in past eras. The lesson for owners of independent agencies is that change and flexibility are essential to generate further growth.

Roger Keith & Sons, an independent agency operating in Brockton, Mass., was founded in 1869 and continues today in its fifth generation of ownership. But Donovan Dunn, president and CEO, said the independent agency must follow new paths to sustain success. An agency principal needs to be proactive about revenue growth, agency operations, and agency finance in light of today’s economic environment.

“Everyone is thinking differently about the way businesses are operated and the environment is much more competitive,” said Dunn. “We have to work harder than ever to earn and retain customers. I think the U.S. recession has had a significant impact over the last five years, and the belief that the insurance industry was ‘recession-proof’ proved incorrect.”

Dunn and co-principal Sherry Meadows both were agents when they acquired the firm in 2007 (from his father-in-law and her father, Robert Meadows). This newest generation of ownership has led the agency during one of the most turbulent financial times in the nation’s financial history. Since the purchase, Dunn reported: “We have merged with or acquired six books of business and continue to look for opportunities that fit our specific growth strategy.”

Funding Acquisitions

The agency’s strong book of business spread among personal lines (27 percent), commercial lines (63 percent), and life and health insurance (10 percent)—along with a specialty in medical professional coverages—provided the firm with a strong revenue base. But Dunn saw the impact of the recession. “We had been funding the acquisitions via cash flow, and as the economy turned and commission income receded, it became challenging to continue to look for opportunities while containing our current expenses,” he pointed out.

The silver lining of the most-recent financial cloud, though, was an improvement in interest rates. This presented an opportunity to refinance the agency’s acquisition debt at more favorable terms. But Dunn didn’t just want a new loan from any source. He turned to InsurBanc, a division of Connecticut Community Bank, for financing, coming highly recommended within the independent agent community.

New Perspective

“I was looking for an innovative way to consolidate our debt, allow for flexible cash management and give me the means to continue to grow via merger and acquisition,” said Dunn. “After receiving proposals from our existing bank, it was apparent it didn’t have a true sense of what the value of an agency is.

“After speaking with InsurBanc, I had a totally different perspective on what a lender could do for us. The solution fit our initiatives perfectly,” Dunn said. Knowing that InsurBanc understood our business made the process much easier. It’s reassuring to have a banker as knowledgeable as they are.”

Roger Keith & Sons chose a term loan from InsurBanc to refinance its existing debt and obtained a credit line for working capital. The agency also brought its full business banking relationship to InsurBanc for cash management, and gained access to online banking and remote deposit tools to streamline operations.

“Coupling banking with insurance agency expertise was what sold me on InsurBanc. The relationship has been fantastic thus far,” Dunn said.

M&A Opportunities

Roger Keith & Sons now has a partner in financial management that provides not only financial capital but intellectual capital. “More than ever now, we need that flexibility to react quickly when an opportunity presents itself,” stated Dunn. “And it is great to know that you can discuss potential M&A opportunities with your banker without their eyes glazing over. To have InsurBanc as an ally is a valuable asset.”

“I feel I can rely on them for that additional expertise they possess in regards to the agency component of the insurance industry,” he added. “Merger and acquisition activity will continue to be a critical piece to our growth initiative, and I do not feel a local community bank can have the same perspective or responsiveness as InsurBanc.”

Important Notice

InsurBanc will be closed on Monday, October 9th in observance of Columbus Day.

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InsurBanc will be closed on Wednesday, June 19th in observance of Juneteenth National Independence Day.
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