CAC bolsters financial capabilities with JPMorgan Chase-supported syndicated loan

CAC Group has strengthened its financial capabilities after expanding its syndicated loan facility with the addition of JPMorgan Chase, in a move that strengthens the broker’s drive to meet its strategic goals including adding further talent and entering new markets, The Insurer can reveal.

The business, which comprises CAC Specialty, Cobbs Allen and Dorset Peak, has not disclosed the size of the newly agreed facility, but this publication can reveal it was led by Wintrust Financial Corporation and included participation from various other financial institutions including Synovus and JPMorgan Chase.

Speaking to The Insurer, CEO Mike Rice and CFO Chris Trotter said the increase in the company’s capital resources will enable it to both pursue new markets and invest in key areas of growth.

CAC’s relationship with both Wintrust and Synovus goes back several years, with the two banks having supported the company’s build-out of CAC Specialty.

But the addition of JPMorgan Chase has allowed the company to upsize its facility.

“We welcome an excellent addition to our longstanding banking relationships, further solidifying our strategic position,” Trotter said.

“[JPMorgan Chase is] front and centre in a lot of mergers and acquisitions and equity raises, and other ways of financing in our space.

“Having the best of both worlds with some really strong regional partners, and now with a global partner, will allow us to continue to move forward on our growth path,” he added.

In a statement, Lena Dawson, president of Wintrust Insurance Banking, a division of Lake Forest Bank & Trust Company, N.A., said Wintrust “is pleased to continue our support of CAC’s vision and strategic growth initiatives through an innovative financing solution”.

“We’re proud to leverage our insurance industry expertise to put together a thoughtful and tailored solution for CAC Group,” Dawson added.

As Rice highlighted, CAC’s operations have grown considerably in a short space of time. As this publication reported earlier this year, the entire group generated revenue of some $185mn in 2022, growth of over $45mn from 2021.

Much of that came from CAC Specialty, the start-up broker launched in 2019. Revenue from CAC Specialty alone hit $135mn last year, up from $52mn in 2020 and $104mn in 2021. And that growth has continued this year, with Rice stating that the broker through to the end of April has “already done north of $50mn in new business”.

Much of that growth has been funded by cash flow, said Rice.

“We [haven’t raised] any money in equity from outside investors. We had a few rather small amounts of debt for the size of company that we're building, and we have predominantly funded all the growth with cash flow.”

But Rice said CAC continues to see plenty of opportunities for further growth, and as the executive explained, in order to take advantage, it became a question of whether it could capture those purely through cash flow, or whether it should go into the debt market.

“Debt seemed like a really good opportunity for us,” said Rice.

“Now we've added a third [bank] to the facility, it gives us more capacity to fuel future growth,” he said.

Even with the new facility, Trotter said CAC’s leverage “is so low, especially relative to our peers in the industry”.

As Rice noted, many of CAC’s high-growth peers “are operating at five to maybe eight or nine turns of debt”, but his firm is operating “at kind of 1.5”.

“Having the opportunity to add more to that gives us more opportunity to potentially further our growth,” Rice stated.

M&A not on the cards

While the new facility bolsters CAC’s access to funds to support growth, Trotter said the broker will continue on the path it has taken, and that means mergers and acquisitions are unlikely to be a focus for the firm.

“Multiples in our industry remain high,” he said.

“They might have ticked back a bit, but they're still not at a point where we have broadly felt them to be attractive,” said Trotter.

Rice said there is no particular area where CAC will look to utilise the funds, although the executive said the firm will continue to invest in its newly launched healthcare practice, as well as “augment the specialty practices that we're already in”.

“We’ll continue to add more producers, and continue to invest more in our transactional products, and our financial lines products,” Rice said.

“I wouldn't say there's any particular industry group that we're necessarily going after in a big way right now, but we've got some investments that we need to augment in a major way, and that's what we're focused on.”