Anatomy of a Top Producer
10,000% Growth? It's possible.
Everyone wants to succeed; to be recognized by peers for hard work and benefit financially from years of consistent, dedicated service. Everyone wants that recognition; not everyone receives it. The irony, now, is that at the start of Gregory Belton’s career, the world appeared to conspire to prevent him from becoming a broker. Working as an underwriter, his bosses had said he was crazy to leave his cushy insurance company position in the early 1990s. Other brokers predicted failure, quickly. Despite these ominous pronouncements, 29-year-old Belton and his partner, 24-year-old John Hawkrigg, bought Muntz Beatty, a Toronto brokerage and there’s been no looking back; they haven’t had time. In a few short years Belton and his partners increased the firm’s premiums from $3 million to $300 million–a 10,000% growth–building the business through smart acquisitions, and partnering with other successful businesses.
We spoke to Belton about the trials and triumphs that he and his partners, John Hawkrigg, Robert Keilty and Neil Morrison, experienced on their way to making HKMB Hub International the most widely recognized commercial brokerage in Canada.
Building the business
CI: When you bought Muntz Beatty, you implemented a unique compensation system. Tell us about that.
GB: When John and I purchased Muntz Beatty, we made a realistic assessment of our situation–which included that we had significant acquisition debt to pay down and that we had a steep learning curve. We decided we would pay ourselves equal, modest salaries, not take commissions and concentrate on paying down our debt, while reinvesting in the growth of the business. The rest would take care of itself at a future time.
When we merged with GKB in 1994 and bought out Trivest’s interests in both firms, the partnership of two became an equal partnership of four, with Robert Keilty and Neil Morrison from GKB. The four of us continued this same practice of remunerating ourselves with a salary, no commissions and profit sharing only when it was feasible.
It is very tempting for brokerage owners to strip out the profits of the business each year. We chose to reinvest in acquisitions, adding good people and building the business. For 20 years we kept this practice up.
CI: What sort of growth did the firm experience?
GB: In the three years from 1998 to 2002, we grew 300% organically.
When we merged Muntz Beatty and Guthrie Keilty in 1994, we strengthened our client base in a number of industries–enough that we could form industry-specific practice groups. The same plan occurred when we merged with Hunter Rowell in 1998.
CI: What factors were essential in order for the firm to achieve such significant growth?
GB : Three factors were integral to our growth: compensation, capitalizing on market strengths and the strength of the four HKMB partners.
GB: Our decisions, as partners, on how we would be compensated and how to structure our business were integral to our significant and quick growth. When John [Hawkrigg] and I first started with a purchase of a 100-year-old brokerage we knew that we were in this together–50/50. At that time we figured that since we now owned the business, we didn’t have to pay ourselves commission. Instead we drew a modest salary, and reinvested any profits back into the business. When we merged, in 1998, to become HKMB, all four of us agreed to maintain that business model–for each partner to draw a modest salary, rather than strip the profits out of the business, and reinvest back into the business. We got into that practice and never stopped–for 20 years we never stopped. We never took any large sums of money out of the business, although we had many opportunities along the way.
By operating this way, we built a business based on relationships, rather than competition.
I’m not criticizing the commission environment but, in our case, we never had a barrier to dealing with any issue that might arise from our business relationships. In a commission environment, where we are competing against one another, we may not have taken the time to deal with a crisis if it wasn’t our direct client. The idea being, if I can’t sell the insurance and get the commission, I’m not going to service the client. But, [based on our model] we were all equals–any one of us would jump in, wherever we were needed.
2) Specific Markets
GB: [The next factor was that when] we brought the two firms together, first to form KMB, and later HKMB, we had larger, stronger areas of strategic growth. With the merger, we were able to create a larger, stronger, more comprehensive specialized market groups–and this gave us more presence and a better story in the industry. It was then a matter of following the money. When the venture capital cash that fuelled high tech switched to life sciences, HKMB developed a specific market group that focused on this area of the business. When the venture capital then shifted from life science to green-tech, HKMB was already prepared with a green-tech specialty group. While the money fuelling the growth in each area was the same, the expertise, language and risk were all different. By following the money–the venture capitalists–we were able to provide experts in each area, which further increased our dominance and growth in these specific practice areas.
3) The Four Partners
GB: [The third] reason for success was that we had an attitude of ’all-for-one-one-for-all.’ All four partners were equally paid and did whatever it took to support one another and grow the business. For 18 years we were the four that defined HKMB and the decisions we made about the business were strengthened because we all had similar perspectives and life goals. In some firms there will be a senior shareholder, who’s close to retirement age, and then a potential successor who is 20 or more years away from retiring and both are at very different stages of life–so they have very different needs from the business and this perspective impacts decisions.
The four of us [HKMB partners] were well matched. We were all around the same age and we all came from similar backgrounds. Each one of us had distinct, but similar, aspirations and each of us strived to find balance in our lives. We had complementary strengths and skills–if one person was weak in an area, another was strong. Between the four of us we coped with every situation that came our way. It was an important way to operate–as equals–because it allowed us to find balance in our lives. As we grew, we surrounded ourselves with a partner group who added depth and brought additional skills to the mix.
CI: How did persistence help the business?
GB: One shouldn’t just accept things because someone in authority tells you. When I worked in an insurance company… they were considering promoting me into a head office position. And they put me through a battery of psychological tests. One of the questions asked was, “If you weren’t working here, what would you be doing?” I said, “I would like to be an insurance broker. In fact, that’s what I think I’m best suited for, ultimately. And not only do I want to be an insurance broker, I want to own an insurance brokerage.” After all these tests, my boss sat me down and told me: “Greg, you’ve scored very well on this report. You have strong aptitudes in the areas that were important to us. But I think you’re a little unrealistic about certain things… Your aspiration to own an insurance brokerage is ridiculous. You don’t have any money. You’ve never been an insurance broker and you’ve never run a business.” It turned out to be the perfect segue, “Sir,” I said, “I wanted to talk to you about that because we just bought an insurance brokerage.”
Everybody told us we couldn’t succeed. We just put our heads down and ignored it, and believed in ourselves and the people we worked with.
CI: How did Trivest Insurance Network Ltd. initially help your business?
GB: Trivest gave us strong operating discipline–budgeting and robust business planning. They weren’t running the business or growing the business. We had to do that. But they gave us structure based on lessons learned from observing their other brokerage investments. Even after they exited the business seven years after we bought the brokerage, we continued to employ a lot of that thinking.
CI: These days, there are those concerned about financial links between insurers and brokers. How would you respond, based on your experience with Trivest, whose parent company also owned Wellington?
GB: Trivest was two steps removed from Wellington [the insurance company]. There was only a dotted-line connection.
We didn’t feel beholden to an insurance company. And, I think in reality, people’s fears to a large extent are overstated. An insurer’s investment, by providing loans or equity, will not, at the end of the day, impact where a broker will place business. The broker will place the business with the insurance company that does the best job for their client. There’s tremendous competition, so many insurers and many brokers fighting for every piece of business, you can’t simply place a piece of business with an insurance company just because you have a loan from them. A competitor is going to come by and find a better deal for your client.
CI: Could you give us an example of how the firm was able to identify and capitalize on new areas of business growth?
GB: Back just before Hong Kong was being handed from the U.K. back to China, we formed an Asian practice team to capitalize on the influx of money from Hong Kong into Canada –specifically into Ontario. Of course, the handover went better than most expected, and some of the expats returned to China. Now, Canadian companies are outsourcing business to manufacturing in China, or opening up facilities in China. China represents a murky regulatory environment, when it comes to insurance. You need somebody to hold your hand to go into that market. We had people in our office in Toronto who worked in Hong Kong and the insurance market, who understand that business very well. So we handle Asian investment into Canada, and Canadian investment into China.
CI: How has your business attitude influenced your approach to your charitable work, particularly with the Duke of Edinburgh’s Award organization?
GB: My first involvement with [this charity] was as Chairman of the Ontario division. I had no previous involvement, no alliances prior to this position and, as a result, asked lots of questions. The answers to my questions prompted the overwhelming response: “We can’t. We’ve always done it this way.” Because I hadn’t been part of the organization before, I wasn’t worried about ruffling people’s feathers. I wasn’t going about it in a brazen way, but it just seemed to me to be obvious that some changes needed to be made. And I made them, and the results were very positive. Later, I was elected National President [of the charity] and then to the international board, which led to my appointment as the International Chairman in 2007–with a request to stay in this position until 2016.
CI: What’s the biggest threat facing Canadian insurance brokers today?
GB: I think the industry finds its own equilibrium. There are new challenges all the time. The challenges we face today, such as with underwriter profitability, won’t be here two years from now. [Also], there are fears about new entrants into the industry. That has occurred many times over the generations. Somehow the traditional broker distribution model finds a way to compete with it. The service we provide is a necessary one. I don’t think that’s going to go away.
Where did this top producer get his start?
The son of insurance industry leader Ted Belton, Gregory studied political science at York University’s Glendon College in Toronto. He joined insurance firm Crawford & Co. in 1981, working in the Atlanta and London, Ont. offices before jumping over to Fireman’s Fund Insurance Co. in Toronto. There he gained underwriting and marketing experience, and he stayed with the firm as Trilon Financial Corp. acquired the business, and as Fireman’s became Wellington Insurance.
That’s where Belton conspired with Wellington underwriter trainee John Hawkrigg to purchase Muntz Beatty Inc., a Toronto brokerage with roots reaching back to 1889, with funding from Trivest Insurance Network Ltd., a risk-management company that invested in brokerages at that time.
Muntz Beatty would eventually buy Trivest out, and merge with Guthrie Keilty Bickerstaff. The business became Keilty Muntz Beatty in 1994. And in 1996, the company became a shareholder partner with Assurex Global–an elite worldwide brokerage network–affording the firm a global presence. Belton would be Assurex’s chairman from 2003 to 2005.
In 1998, the company acquired Hunter Rowell Ltd. to become Hunter Keilty Muntz Beatty (HKMB).
Fast-forward to 2006, when HKMB acquired the commercial business of the Toronto and Vancouver offices of Morris & Mackenzie, giving the company a foothold in western Canada.
By 2008, the business had become so big that it had outgrown the partners’ personal resources. In order to get to the next level, the HKMB partner team knew they needed to partner with a larger entity; a business with similar values. Out of the many suitors, Hub International was the right fit. Now HKMB–as HKMB Hub International–helps Hub to grow internationally.
Gregory Belton’s charitable achievements
Nearly 19 years ago, Gregory Belton took on the role of Chairman of the Duke of Edinburgh’s Award in Ontario–the provincial branch of an international youth development program, initiated in 1956 by HRH Prince Philip, Duke of Edinburgh.
When Belton began, he never anticipated that one day he would be working closely with Prince Philip to help youth improve their lives through physical fitness, community involvement, skills-development, and adventurous journeys.
In 2007 Belton became the Chairman of the International Association–a position previously held by HRH. In this role Belton continued to work closely with Prince Philip, Prince Edward, and other global business leaders working with the charity.
These are not his only achievements. Here’s a broader picture:
Appointed chairman of Ontario division of the Duke of Edinburgh’s Award
Appointed national chairman — pushes to reach disadvantaged youth, aboriginal, disabled, those in detention centres
Appointed trustee of the Duke of Edinburgh’s Award Association
Appointed chairman of the Upper Canada chapter of the Young Presidents Organization (YPO), an international group for business leaders under the age of 50
Receives Queen’s Golden Jubilee Medal for significant contributions to Canada
Receives Young Presidents Organization Legacy Award for members who have excelled in business, family and community
Invested as Knight of the Papal Order, the Equestrian Order of the Holy Sepulchre of Jerusalem, the highest Papal award
Based on results as national chairman, Prince Philip appoints Belton to international chairman; Belton is asked to hold the position until 2016
Director, St. Mike’s Hospital Foundation; former director, Toronto General Hospital Foundation; former director, Toronto Insurance Conference; former board member, Salt & Light Television, a Catholic media organization
In March Belton was officially appointed Commander of the Royal Victorian Order (CVO)–the highest award a Canadian citizen can receive. The award recognizes over 18 years of community service through the Duke of Edinburgh’s Award. It also honours Belton’s efforts to help “at risk” youth throughout Canada, through the Charter of Business, which has raised over $10 million (CDN) in donations since its inception in the early 1990s.
© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the April 2010 edition of Canadian Insurance Top Broker magazine.