Taking the High Street: Meet the TC company building a nationwide insurance empire
If you’ve been watching the insurance landscape over the past several years, you may have noticed a significant uptick in the amount of mergers-and-acquisitions (M&A) activity in that space. For a variety of reasons – ranging from technology to taxation to the pandemic – the insurance industry is consolidating at a rapid pace. But did you know that some of the companies leading the M&A charge in the insurance world are based in Michigan – and that one is situated right here in Traverse City?
The company in question is called High Street Insurance Partners, described as an “independent, national insurance and financial services network.” Launched in 2018, the business was formed “with the vision that merging industry experts with insurance product expertise will be the key to significantly enhancing the customer experience and creating sustainable, profitable growth.” Said another way, High Street was built with the intention of acquiring insurance agencies around the country, bringing them under the umbrella of a collective network, and then allowing the former agency owners to continue running their businesses as members of the High Street team.
If raw acquisition numbers are anything to go by, High Street is accomplishing its goal. The company ignited its ascent by purchasing the Traverse City-based Peterson McGregor and Associates LLC in 2018, and has since been leveling up its M&A game year after year. According to CEO Scott Wick, High Street closed two acquisitions in 2018, five in 2019, and 10 in 2020.
2021 will be far and away the company’s biggest year yet. Wick told the TCBN that, by the time Dec. 31 rolls around, High Street should have completed 87 acquisitions this year alone. In large part because of those purchases, the company will notch somewhere in the neighborhood of $300 million in revenue for 2021 – up more than 3,200 percent from its 2018 revenues (approximately $9 million), and even up 328 percent from last year’s ballpark total ($70 million).
Those numbers make a convincing argument for High Street Insurance Partners being the kind of company for which the sky is truly the limit. All told, the business should have 104 acquisitions under its belt come Dec. 31, and that blistering pace of buying has turned High Street rapidly from small business to large national company. By the New Year, the business will have over 1,750 employees across 255 insurance offices in 23 different states.
Throughout 2021, High Street Insurance Partners has consistently ranked as one of the 10 leading companies in North America in terms of insurance industry business acquisitions – a data metric tracked each month by the Chicago-based consulting firm Optis Partners LLC. Regularly topping the Optis list is a fellow Michigan enterprise: the Grand Rapids-based insurance brokerage and fintech company Acrisure, which racks up roughly 100 acquisitions per year. By following in Acrisure’s footsteps, High Street is establishing itself as a big player in the insurance industry, just as that industry shifts and evolves.
M&A activity is perhaps the biggest harbinger of the evolution. Investors are buying insurance companies because they offer a relatively crisis-proof investment – particularly appealing during a global pandemic still winding on without a clear end in sight. Meanwhile, independent agency owners are selling because doing so can allow them to adopt new technologies, expand their offerings, and potentially even avoid costly federal tax increases – among other reasons.
In 2020, there were 791 reported M&A deals involving insurance agencies or brokerages in North America – a historic record. In the first half of 2021, there were an additional 339 deals. That’s higher than 2020’s first half count, though the comparison point is skewed heavily, due to a Q2 2020 slowdown of M&A activity triggered by the arrival of COVID-19. 2020 M&A activity ultimately saw a record quarter in Q4, with 300 insurance deals closed in North America in that three-month period alone. It remains to be seen whether 2021 will top last year’s record – though Wick and many other industry experts are confident that it will.
“We’ve seen M&A grow dramatically since 2013 in the middle market insurance agency sector,” Wick said. “2020 was a record deal tally, and 2021 will certainly eclipse it. I don’t believe that momentum slows down in the short-term.”
There’s a balancing act to all of High Street’s growth. Wick admitted that, with the wrong approach, acquiring dozens of new businesses each year and growing at such an exponential rate could render a business top-heavy and unstable – especially a business that hasn’t even hit its own five-year mark yet. In Wick’s view, High Street is accomplishing that balancing act by mostly allowing its agency partners to keep operating as they always have – with the same leadership, the same teams, and the same approach to client relationships. High Street fulfills its end of the bargain by providing the agencies it buys with “a greater depth and breadth of resources, technology, tools, and collaboration.” The result, Wick said, is a mutually beneficial relationship where High Street gets to build its reach and influence, but where small community insurance agencies get the support they need to evolve and keep pace with a rapidly modernizing industry.
“We still believe that insurance is a people business and that client relationships remain the tip of spear,” Wick said. “How data science, artificial intelligence, and machine learning complement and support the client relationship is something I believe our industry will continue to explore and lean in on.”
Wick is adamant that each agency to join the ranks at High Street should continue functioning more or less as an independent entity. In most cases, clients of the insurance firms that High Street buys wouldn’t even realize the switch from independent agency to subsidiary. For instance, while High Street acquired Peterson McGregor in 2018, that business still has its own brand, website, and social media presence, and touts highly local insurance service via offices in Traverse City, Cadillac, Lake City, Manistee, and Petoskey. That local sensibility, Wick said, is crucial to his vision for High Street in the long term: The company will be national, but the agencies themselves will retain their local roots.
“We have some great local partners, [including] Peterson McGregor Insurance and KorthaseFlinn Insurance & Financial Services,” Wick explained. “Both firms are deeply rooted in the northern Michigan communities they serve. We will keep the same recipe [going forward]. We want to remain pillars of the communities where we are today and continue to grow the footprint.”
Still, while High Street’s business model and M&A strategy both point toward a geographically spread-out future for the company, Wick does see Traverse City as the epicenter of that growth. While he and his wife Megan had lived in Chicago for almost 15 years leading up to the establishment of the business, they were drawn to northern Michigan for “a bit of lifestyle change” and for the promise of finding a better balance between family, community, and work.
Since then, High Street Insurance Partners has established a new tradition, which it calls the Presidents Classic. That event, hosted for the first time this past October at Grand Traverse Resort and Spa, invited the heads of High Street’s partner agencies to Traverse City for team building and engagement exercises. Wick also noted that High Street has been working on “recruiting and attracting industry leaders” to the region – and that several people have already moved to northern Michigan from Boston, Chicago, Detroit, and other big cities to take leadership roles with the company.
That idea – of an increasingly influential and far-reaching insurance firm centered right here in Traverse City – maybe isn’t one that Wick would have imagined succeeding 15-20 years ago. But he’s had a strong example to follow: That of Hagerty, another locally-founded insurance-driven business that has grown far beyond its initial scope.
“Certainly, Traverse City has a great insurance track record,” Wick said. “What McKeel and his team have done at Hagerty is inspiring. They epitomize community and we hope to follow their lead.”