“We distinguish ourselves, simply stated, through our people through their competence and their passion,” he said. “Our focus is not on building the largest firm in the insurance brokerage and employee benefits business, but on building the most respected.”

Nestled between the world's largest broker and specialty insurance agencies, Chief Operating Officer James Meathe sees a different breed of privately-held firms staking their claims to the forgotten territory of client service.

“If you look at our business, there are really three segments: There are the mega-brokers. Then there are thousands and thousands of high-service small agencies that have revenues from $1-to-$3 million. Then there's that ever-shrinking class of boutique brokers that are privately held and have $150-to-$500 million in revenue,” he said, referring to the class that Palmer & Cay falls into.

“We are in the process of creating a firm that blends the incredible intimate service that the small firms give their customers with the sophisticated talent that you come to expect from a large firm,” Mr. Meathe said.

The move to create such firms reflects “the recreation of the brokerages that customers cherished 10-to-15 years ago.” Those firms of yesteryear have “all been swallowed up through acquisitions,” Mr. Meathe observed.

Palmer & Cay has swallowed its share of property-casualty agencies on the road to becoming the second-largest privately held independent brokerage and benefits consulting firm. According to Savannah press reports, the firm bought at least eight agencies in the 1990s, as well as some consulting practices, including several divisions of KPMG.

But most of the growth has been internal, Mr. Cay said. “We've never believed in the philosophy of buying business as much we do in [the idea of] buying to get the right people,” he said, explaining how the firm expanded its Georgia roots clear across the United States in recent years.

“In some cases, we've had to buy the businesses to get the people. In other cases, we've hired people,” he said, pointing to Mr. Meathe, who had 22 years of experience with brokers Johnson & Higgins and Marsh before joining Palmer & Cay.

According to Mr. Meathe, the firm hired over 200 highly specialized employees in the last 15 months. He also reported that it took nearly 100 years to achieve $1 million in revenue a mark that was reached in 1963. Now, he noted, “we're on the road to producing $1 million of new revenue a week.”

Palmer & Cay's revenues were just $3.5 million in 1985. In 2003, total revenues came in at $134 million. (Kansas City-based Lockton Companies is the largest independently owned brokerage, with revenues of just over $250 million in 2003, according to the firms Web site.)

Although one executive tells the story through the eyes of a newcomer, and the other represents the fourth generation of a family of executives, Mr. Meathe and Mr. Cay share a common vision of the firm they lead. They view it as a company that's intensely focused on keeping clients and employees satisfied. They're able to maintain that focus, both report, because the firm is privately held.

Mr. Meathe said that when he joined Palmer & Cay in February 2003, he saw the firm as “a platform that was near perfect to take advantage of the changing insurance brokerage environment in the United States.”

“Being privately held allows us to make long-term, client-oriented decisions,” he explained, adding that with revenues over $150 million, Palmer & Cay has the resources to “make significant investments to satisfy the technical and specialty requirements of customers and prospective customers.”

Mr. Meathe also said he admired Mr. Cay's courage to remain independent while the broker world has consolidated.

It was two years ago, according to Mr. Cay, that he truly struggled with the question of whether Palmer & Cay would remain an independent enterprise, go public or be merged into a public company. At that point, “we reached something of a crossroads,” he said. “We concluded that it was in our clients' and employees' best interests to continue as an independent enterprise. As such, we created a partnership of 115 people across the country” to help drive its value in the future.

“Our focus is on creating an environment where we can take great care of the client as opposed to [living with] concern over next quarter's earnings,” he said.

The firm is now 100-percent owned by 115 partners, with each having a significant stake in the business. The 115 people selected to buy into the brokerage “meet very high standards not only standards of performance, but living what we call the 'Palmer & Cay Way,'” which, Mr. Cay explained, is all about strong client focus.”

In addition, “the 'Palmer & Cay Way' is all of us doing the right thing,” he said, referring to a “strong cultural commitment” of adhering to high ethical standards “that's been built over generations. It's part of our reputation, which we guard jealously.”

In addition to allowing for better client focus, Mr. Cay said being privately held also allows the firm to focus on a second main goal “creating the best place to work.” This means that the leaders of the firm work to create “a positive work environment [with] a performance-and-rewards system that is the best in the business,” he said.

“We believe that we work for the people who are on the front lines serving the clients,” Mr. Cay added, referring to himself and to Mr. Meathe. “They don't work for us. We work for them” by making sure they have a positive work environment, he said.

The performance-and-rewards system, which rewards employees who meet specific goals, “goes all the way throughout the organization,” he noted, referring to the fact that it applies to everyone on the line and up through senior management.

An entrepreneurial environment that's “free of bureaucracy” is also part of the “best-place-to-work” vision, he said.

Mr. Meathe believes that the lack of bureaucracy is a big draw for new hires. “They want to work in a more intimate environment where they can make a difference,” he said. “If you have a good idea, you implement it.”

In addition, he noted a strong interest in playing a broader role with clients among the senior ranks. “Our senior-most employees in management are client- and market-facing. Many people want to get back to that,” he said.

According to Mr. Meathe, a defector from the larger brokerage ranks, “the insurance placement strategy of the mega-brokers is frustrating to many” employees because it “prohibits those who are closest to customers from being intimately involved in the placement of insurance.”

Explaining his assertion, he said that larger firms have separate placement groups that do nothing but negotiate insurance transactions with the insurance companies, while client-facing executives do not have hands-on responsibility with the insurance company market.

Such a strategy, he believes, “leads to less than optimal results” because the risk placement departments don't know the clients well enough to negotiate effective placements.

At Palmer & Cay, Mr. Meathe said, the team that works with the client day to day is the same team that places the risk with the insurer.

“There is a huge demand” for a new breed of broker from employees of mega-brokers who feel disconnected as evidenced by all that have come and the 500 that are waiting in line to come and customers who want dramatically improved service,” according to Mr. Meathe.

Industry consolidation, he said, has created an opportunity to develop this new type of boutique broker “that can solve any risk issue” because it has resources to develop product expertise, “yet delivers service that is unparalleled.”

“I think you'll see several” members of this new breed “being developed over the years,” he said. “It's the healthiest thing that can occur. It's the best thing for our customers the risk managers.”

Reproduced from National Underwriter Edition, April 5, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.