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Man-Morris merges with Chicago's Gallagher & Co.

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by Paul Flemming

SBJ Staff

Springfield's Man-Morris Insurors Inc. has merged with Chicago-based Arthur J. Gallagher & Co. Management and staff at the 45-year-old Man-Morris will remain in place.

"It was a mixed-emotion deal," said Jim Morris, chairman and founder of the local company. "It's the only company of all my companies that I really had my heart in."

Consolidation in the insurance industry, driven by the current long cycle of a soft insurance market, and the benefits of joining Gallagher were behind the merger, Morris said. "I really felt so positive about it: what it would do not only for the agency, but for our customers."

Jim Sanders, president of Man-Morris and area president of the new Gallagher-Morris Insurors, said the new operation will be business as usual for the most part.

"We will be totally autonomous," Sanders said. "They give us support but we get to run it."

Jim Agnew, area president for Gallagher in St. Louis, said that is the company's philosophy.

"We don't go out and try to buy firms that we view as having need for lots of hands-on external management," Agnew said. "We allow them to operate pretty much autonomously. That's the culture of our company."

The Man-Morris merger was announced at the same time as the acquisition by Gallagher of another agency in Tulsa, and recently the company announced a number of acquisitions of California agencies. Gallagher is pursuing a strategy of acquisition for growth.

"Consolidation is going on all over the country," said Ron Ollis, president and chief executive officer of Ollis & Company Insurors in Springfield.

Earlier this year another local agency, Thomison Insurors, merged with Rebsamen Insurance of Little Rock.

Morris said the current state of the insurance industry is the longest soft market he's seen in his career. Soft markets are marked by competitive pricing and the wide availability of insurance. Underwriting coverage that would normally be in nonstandard markets is now available in standard insurance markets, Sanders said.

"Pricing has been very attractive for the insurance buyer," Ollis said. But even as premiums are kept low, expenses remain, squeezing margins.

Morris said the long bull equity stock market has also been a cause of the soft underwriting market for insurance companies, as investment profits make that sector of the insurance industry more prominent.

"We've had 10 to 12 years that have been soft in pricing," Sanders said. "To gain market share, you almost have to acquire to keep the upper hand."

That's behind Gallagher's strategic acquisitions, Agnew said, and the deal with Man-Morris also gives Gallagher entry into the attractive southwest Missouri market.

"We just feel there is very strong growth in this part of the state. There is a lot of community growth, which offers a lot of opportunity for insurance growth," Agnew said.

Though Gallagher had clients in southwest Missouri, Agnew said making inroads into an area is difficult without a physical presence, and even then, familiarity is important.

"We're looking to expand our commercial writings across the board. It's very difficult to establish yourself, it takes a long time. (The merger with Man-Morris) just springboards you."

"Springfield people are very loyal," Morris said. "By partnering with us, it will open doors instead of shut doors" for Gallagher.

There are 22 people in the offices of Gallagher-Morris. Sanders said the company will be hiring and hopes to double the size of the local office in the next five years.

The deal has been in the works for more than a year, Sanders said. Agnew said Gallagher had sought an agency in Springfield for about four years.

Morris began in the insurance business as an 18-year-old, selling auto policies to customers of his father's car dealership before he entered the U.S. Air Force. When he returned to Springfield after his military service he continued in the business and started his own company.

"The fundamentals of insurance have never really changed a lot," Morris said. Customer service and relationships with people are the bedrock of insurance sales, he said.

Morris acquired local agencies as his business grew, including the Squibb Agency in 1974. At that time, Frank Manzardo became president of the company and lent his name to it along with Morris. Sanders succeeded Manzardo as president in 1992.

"My enjoyment's always been in sales and marketing," Morris said, noting that others, Manzardo and Sanders among them, were responsible for management of the business. Morris will stay involved with the company, though he's got a resolution in mind for the new year.

"I've worked harder this year than I've ever worked in my life," the 67-year-old Morris said. "My New Year's resolution is to try and slow that down a little bit."

Gallagher-Morris Insurors is a division of Arthur J. Gallagher & Co. It is a publicly held company, traded on the New York Stock Exchange under the symbol AJG.

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