Selman & Co. acquires Vision Financial

For Cleveland insurance administrator Selman & Co., the key to growth has been diversification.

And that remains a theme behind its most recent acquisition as the firm keeps its sights fixed on claiming a larger share of a fragmented market.

Selman, a Mayfield Heights-based marketer and administrator of life and health insurance products, on Jan. 31 closed its acquisition of Vision Financial Corp., a third-party administrator of benefits based in Keene, N.H.

Terms of the deal were not disclosed.

Vision Financial, founded in 1989, was on Selman’s radar at least eight years ago, said president and CEO David Selman. But the timing wasn’t right back then, Selman said.

The company also was in the midst of seeing through some other deals at the time.

“They had some technological success we wanted to take advantage of, investing in systems we thought would benefit our clients and prospective clients,” Selman said. “Evolution and consolidation in the insurance business is creating additional pressure that makes the timing right for this today when it wasn’t eight years ago.”

Vision Financial, under similar pressures to diversify to keep their business strong, saw a fitting partner in Selman’s firm, considering the Cleveland company has been expanding its offerings steadily through the years.

“We’re very proud to deliver customized technology and superior customer service, and now we’ll be able to do so on a much broader scale,” said Jay Pettapiece, president of Vision Financial, in a statement.

This deal marks the firm’s 11th acquisition since its 1980 founding, but it’s the first since 2014.

That year, the company acquired the business and assets of Association & Society Insurance Corp. of Rockville, Md., and the life and accident insurance administration business of MAI Services Corp. in Cuyahoga Falls.

The ASI deal nearly doubled Selman’s staff at the time and added a Washington, D.C., office. It also broke Selman into a business serving retired veterans and their families.

Both acquisitions increased its insurance premium under administration by nearly 30% to $155 million from $120 million — and the Vision Financial deal grows that figure to $300 million.

Through MAI, meanwhile, Selman became the administrator for roughly 60 more credit union and 100 bank clients.

So diversification has been Selman’s gameplan for some time.

Deals like that have helped grow revenues steadily through the years. Recognized by Crain’s as one of the 52 fastest-growing companies in Northeast Ohio in 2016, the business reported annual revenues of $19.5 million, marking five-year revenue growth of 78%.

Vision Financial has a staff of 60 providing administrative, billing, and consulting services for nearly 2,000 employer clients.

That brings the total staff at Selman to about 190, about 125 of whom are in the Cleveland area.

With the deal, employer supplemental benefits are expected to comprise 22% of the combined firm’s total business, Selman said.

Not unlike banks, the realm of insurance administration is under pressure to make tech upgrades to keep with regulations and keep the business efficient. Strong tech platforms are also simply necessary components for administering programs to clients’ employees, and the combination with Vision Financial instantly enhances that platform for Selman.

Gaining those upgrade and further diversifying the insurance administrator business is particularly key for the company because of those ongoing pressures and an uncertain outlook for the insurance industry at large.

“There is certainly some uncertainty in Washington, and that makes for uncertainty for a business plan,” Selman said. “For example, we don’t know whether the (Affordable Care Act) will be repealed or replaced, and no one knows what replacement might look like. Because all benefits revolve largely around what happens to a company’s health care decisions, we certainly are affected by some of those changes.”

That’s why a focus on a diversified business to keep the revenues flowing is so critical in today’s landscape rife with competition and disruption, Selman said.

“You’ve got to be on your toes right now,” he said. “But our goals in 2017 are not about doing another deal. It’s about making sure we do this one correctly.”

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