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Advisen News: Neil Krauter Gets Back in the Game

Advisen

Advisen News: Neil Krauter Gets Back in the Game

NEIL KRAUTER GETS BACK IN THE GAME

After a short-lived retirement and consulting for private equity clients, Neil C. Krauter, the former Vice Chairman of Aon Risk Services in New York and Global Practice Leader of AMAG, the Aon Merger & Acquisition Group, has quietly self-financed a new brokerage venture and re-entered the fray. The Krauter Group, a full-service commercial insurance broker licensed in November 2004, was launched with a sense of immediacy.

Krauter claims to have dismissed several large firms’ offers, and instead followed the advice of his clients. Their view: if the premise and timing are right, why build a business for someone else’s benefit? Krauter agreed. With the market’s hardening and clients’ increasing sense of being “perpetually underwhelmed by their broker,” the opportunity was ripe.

Krauter sees the typical brokerage role as having transitioned from consultative to transactional and he wonders why.

At a time when Elliot Spitzer’s investigations have underscored clients’ shaken faith in the industry, Krauter hopes to re-engage and return that trust, albeit he is aiming heavily at private equity and the M&A arena. Says Krauter, “work well with these CEOs, CFOs and Private Equity players and you discover that insurance becomes only one of many services you can provide.”

While Krauter, in bold suspenders, may dress like an investment banker, he maintains that building a company focused on clients rather than its prospects for being acquired or going public is his driving goal. “We have the luxury of not objecting to a renewal that gets pushed back to the next quarter if that’s what’s best for the client. We’re not a public company trying to please Wall Street.”

A key component of Krauter’s business plan revolves around “fielding [only] an A team for every client.” Krauter’s view is that team players need to have a great stake in the success of the firm without supporting far-flung and unrelated operations. He clearly wants employees to perceive themselves as stakeholders in the business.

As to the financing of his new firm, Krauter silently takes his wallet out from his hip pocket and holds it up. He reports the firm has at least 25 clients so far. An additional Broker of Record letter arrived during this interview which he greeted with a “so that pretty much proves we are up and running.”

In an industry beset by accusations of conflicting interests, The Krauter Group is starting with a clean slate. “No contingencies,” Krauter says with a grin. The Krauter Group won’t need to explain to any client its history with contingent commissions. “We have no legacy issues. An awful lot of people have taken their eye off the ball by worrying about some deal in the past instead of what’s in their client’s best interests. Not us.” What about carrier relationships? Krauter maintains that his reception by most carriers has been reasonable, allowing for the normal bureaucratic protocols. “We’ll be open with all the majors,” he says.

The Krauter Group is quickly attracting a stream of talent, with nearly 30 professionals reportedly having already signed on. Says Krauter, “We will naturally gravitate to players who want to be creative and spread their wings without being constrained. And the top guy here understands insurance.” Krauter is quick to note that his new colleagues joined from seven different firms and have a variety of proven strengths as EVPs, MDs and SVPs. Of course, many Krauter Group resumes also share some working experience with Krauter from years ago, as if he suddenly called up the “old team.” Mark Newdick, the firm’s CFO from United Rentals, is one example.

Krauter expects the firm to grow quickly based upon the people he and his team are now meeting and interviewing. The Krauter Group is located at 1211 Avenue of the Americas in midtown Manhattan, and more offices are planned. Krauter’s forecast, corroborated by Peggy Stewart, a former PEMA Senior Vice President at Marsh, indicates approximately 50 professionals will be on board by mid-year. Where Krauter is the rainmaker, Peggy provides the no-nonsense focus on detail. The Krauter Group is adding talent across all major coverages, from D&O and property to safety and loss control, in order to meet the macro solution needs of their future complex clients.

Beneath the well-spoken approach of a consummate producer, Krauter’s demeanor betrays a certain sense of giddiness at “being unleashed in this entrepreneurial environment.” The atmosphere at the Krauter Group seems to suggest a giant takeover plot, one new client at a time. “Right now, nothing beats getting that next BOR.”



Copyright 2005, Advisen Ltd.