The Growth of Integrity

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John Hilton
January 1, 2023

The company perfected the new model: use of financial might to build massive scale in order to consolidate and perfect back-office distribution. With a near-relentless acquisition appetite, Integrity boasts a network of about 500,000 agents and advisors who serve more than 11 million clients annually.

Integrity’s rocket-ship growth has the industry buzzing. Five years ago, the company acquired Neishloss & Fleming, a Pittsburgh-based company that distributes Medicare Advantage and Medicare supplement insurance plans. Its agent network numbered 120,000 then, according to an Integrity news release.

Integrity is not the only marketing company reaching for scale. Although the companies deny being motivated by competition, Simplicity Group and AmeriLife Group are also growing dramatically via acquisition activity.

The Big Three’s relentless growth is altering the distribution landscape, said Sheryl Moore, president and CEO of Moore Market Intelligence and Wink Inc. Small to midsized IMOs and FMOs are being gobbled up so quickly, it is forcing many to reconsider their plan, she said.

“It is hard to compete against an Integrity, Simplicity or AmeriLife in terms of sales, and therefore annuity commission payouts,” she said. “For this reason, I’ve seen friends talking to these firms when they previously wouldn’t have considered selling so soon. It just seems like for those who had planned to retire in five to seven years, I am seeing more of them entertain discussions with these three firms than I would have anticipated.”

The benefits of scale

Certainly, not all agencies selling out to the super-IMOs are doing so reluctantly. In fact, many are eager to receive interest and offers from the big players. To understand why, one needs to look at what it means to be an Integrity “partner,” as Adams calls them.

In an era of increasing regulatory obligations and segmented marketing audiences, combined with shrinking profit margins, agencies can use the help with back-office functions.

Integrity touts streamlined administrative functions through centralized areas, such as people and culture, technology and innovation, finance, legal and compliance, and “world-class” advertising and marketing. In addition, Integrity offers partners access to proprietary technology through its omnichannel insurtech platform.

“These comprehensive insurance and financial services offerings include valuable agent resources, such as product development, quoting and enrollment systems and customer relationship management software,” Integrity said on its website.

For a smaller agency like Richman Insurance Agency, a Dallas, Texas-based IMO that joined Integrity in August, that kind of backstop can reduce or eliminate a lot of potential headaches.
“This partnership with Integrity is pure opportunity,” said Rob Richman, president of the agency, “to do things you never thought you’d be able to do on your own. And to do it with a big team of resources.”

Adams balks at the perception of Integrity as a voracious acquirer of agencies. He mentions the May 2022 acquisition of Ritter Insurance Marketing, a midsize IMO specializing in Medicare Supplement and Medicare Advantage plans and based in Harrisburg, Pa.

“I’ve never been to [Craig Ritter’s] office,” said Adams, who previously founded Legacy Safeguard, a final expense company. “I’d probably just get in the way. It’s really about how do you come alongside of them, give them more technology, more support, more resources to grow faster and serve more people. So, I think our model is very different than the others, because we’re not trying to acquire business to try to run it.”

Not in the plan

Integrity made its first acquisition in 2013, and to hear Adams tell it, the deal came about almost by accident.

“We never thought about acquiring a business,” he said. “It was never part of our plan. But an insurance company came to us, a really large insurance company, and said, ‘Hey, we’ve got an older distributor that doesn’t have a succession plan. Would you acquire them?’”

That was quickly followed by another, similar offer, Adams recalled, and it quickly became clear that there was a vacuum in the distribution chain that needed to be filled.

In 2016, Integrity took a giant step forward with a capital infusion from private equity firm HGGC, the shop co-founded by NFL Hall of Fame quarterback Steve Young. Young now serves as the managing director of Integrity.

The pace of Integrity’s acquisitions quickened in 2022 as the company snared some high-profile targets:

» Ash Brokerage. Acquired in May, Ash Brokerage is one of the largest insurance brokerages in the United States, with more than 400 employees nationwide. In 2021, Ash Brokerage helped to place over $2 billion of premium, while underwriting $25 billion of face amount for American families and businesses.

Based in Indiana, Ash is a full-service brokerage offering life insurance, long-term care, disability, annuities and retirement solutions.

» PHP Agency. PHP, which stands for “People Helping People,” serves nearly half a million Americans nationwide by offering life and annuity products through its team of more than 27,000 agents. Based in Addison, Texas, PHP joined Integrity in July.

» Annexus. Integrity sealed one of its biggest deals to date with a late-July acquisition of Annexus Group, a product design and distribution company with $45 billion in combined sales and partnerships with some of the biggest companies in the industry.

In 2022, Annexus expects to place approximately $7 billion in annuity premium and $150 million in target life insurance premium, the company said on its website. Annexus is one of the top annuity innovators in the business and touts itself as “the No. 1 independent retirement planning product design and distribution company in America.”

A public future?

In 2021, Integrity received a second infusion of private equity capital, this time from Silver Lake. A leading technology investor, Silver Lake took a minority stake and a board seat with its $1.2 billion investment.

The Silver Lake investment was earmarked for Integrity technology platforms.

“Insurance and wealth services are crucial components of the health care and financial markets — industries ripe for transformative innovation,” said Egon Durban, co-CEO of Silver Lake.

But the mounting investment from private equity has many in the industry wondering if Integrity is destined to go public at some point.

Integrity became an employee-owned business in 2019 with the formation of the employee ownership plan, and at that time paid out a retroactive cash distribution of $50 million to Integrity’s 750 employees. Adams said there are no plans to shake up the company’s structure.

“I don’t really have a desire to take this company public,” he said. “It’s a business that I founded and remain passionate about in how we serve people better together. So, our goal is to continue to grow and continue to expand. And at this point, we don’t have any desire or need to go public.”

Read more: https://insurancenewsnet.com/innarticle/the-growth-of-integrity

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherThe Growth of Integrity

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