A true entrepreneur of insurance

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Jamie Sahara, founder and president of Applied Underwriters, sits down with Insurance Business America to discuss insurance dealmaking and the secrets behind long-term value creation

IB: How did you get started in insurance, and why do you think it’s such a great industry to build a career in? I started my career at Gen Re, which gave me a solid foundation in insurance fundamentals and a broad understanding of the business. From there, I followed the many and varied opportunities the industry has to offer. The world of insurance is vast. The property and casualty and the life sectors each are trillion-dollar industries. Every aspect of modern life and commerce is dependent upon insurance and the risk transfer it provides. Yet, despite its sheer magnitude and maturity, the insurance industry remains fragmented operationally and fragmented by ownership. This allows a lot of entrepreneurial opportunity for anyone willing to apply themselves.

Applied Underwriters® is a global risk services firm that helps businesses and people manage uncertainty through its business services, insurance, and reinsurance solutions. As a company, Applied Underwriters has been distinguished by its innovative approaches to client care and by its strong financial strength. Applied Underwriters operates widely throughout the US, UK, EU, and Middle East. Its operational headquarters is located in Omaha, Nebraska.

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“We make deals to build long-term value concordant with our greater enterprise. That proposition is, for me, endlessly interesting and challenging”

Jamie Sahara, Applied Underwriters

IB: You’ve realized 40 insurance and reinsurance transactions over the past decade, 20 of which Applied has realized since October 2019. That’s a LOT of dealmaking. What do you look for in a deal? Is every deal unique or do you have an underlying strategy? We are not in the deal business, per se. We make deals to build long-term value concordant with our greater enterprise. That proposition is, for me, endlessly interesting and challenging. Building real value requires a lot of thought and vision, as well as the articulation and execution of a viable and coherent thesis.

IB: Can you tell us about some important milestones in your career? What deal or transaction are you most proud of to date? I am proud of the organization we have built, which has become bigger and more powerful than the sum of its individual deals and transactions. I’ve worked hard to drive growth and create value over my career. But with this success has come the need to grow personally. Not all entrepreneurs can keep pace – it’s a personal test that requires a lot of self-reflection. Hank Greenberg, Bill Gates, Jeff Bezos, Warren Buffet, and my partner Steve Menzies also all worked their way up from the bottom, personally growing and rising to the challenges along the way. IB: There’s been a lot of consolidation in recent years, with the big companies getting even bigger. How does this affect market dynamics and the distribution of insurance? At the same time as we’ve seen some large company consolidation, there’s also been a lot of deconsolidation and dislocation. For us at Applied, we’ve uncovered in the last few years many opportunities to acquire top-notch entrepreneurial talent and quality operations from larger organizations. There are pros and cons to being a smaller company; there are pros and cons to being a bigger company. The issues the big and the small company each face are not the same, and the contention between the two perspectives is what yields opportunities for all sorts of entrepreneurs within the vastness of the insurance industry.

IB: How might the current economic environment (inflation, rising interest rates, etc.) affect (re)insurance M&A areas? The cost of debt is going up, which puts pressure on investment returns. But good businesses will always have a home; there will always be a buyer or an investor. On the other hand, prospective or speculative businesses of any kind are going to struggle. Insurtech has already been hit hard, and I expect a slowdown in innovation for the foreseeable future. IB: What is the impact of private equity investment on deal volume and value? Do you see PE interest continuing in the near future?

Private equity firms use debt as a way to leverage and maximize their investments. Debt is also a way for a private equity firm to transfer risk to a lender. So a contraction in the debt markets will certainly affect how private equity firms operate. At the same time, lending itself is going to become a head-on competitor to private equity as it generates higher and higher rates of returns for investors. Nevertheless, private equity has become so large – that is, the pools of capital in private equity funds are now so vast – that private equity will almost certainly just adapt to the changing circumstances. It will be interesting to see how it plays out. Insurance distribution, in any form, produces steady and predictable returns. With pressure on returns, investing in insurance distribution becomes that much more desirable. On the other hand, the volatility associated with insurance risk-taking has always been difficult for private equity. But now, as private equity seeks greater returns, they are going to have to take [on] greater risk, so their current view of insurance risk-taking could well change. IB: Many consider talent acquisition just as important as business/asset M&A. In this global talent crunch, are you seeing insurance organizations change their approach to talent acquisition and retention? What’s your strategy around this at Applied Underwriters? While I’ve of course heard about the global talent crunch, it’s hard for me to answer directly because we haven’t experienced it firsthand. We are fortunate that, given our scale and entrepreneurial reputation, talent generally comes to us. But, as far as I can tell, I believe there’s a mutual flight to quality going on by both employees and employers. Automation ever changes how our businesses operate, and it seems we need fewer and fewer key people in our organizations. So companies seek top-notch talent who can deliver results. At the same time, capable individuals seek the right company environment to express themselves.

“Hank Greenberg, Bill Gates, Jeff Bezos, Warren Buffet, and my partner Steve Menzies also all worked their way up from the bottom, personally growing and rising to the challenges along the way”

Jamie Sahara, Applied Underwriters

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