A Backyard Napkin Sketch Became a $13 Billion Insurance Broker

The plan for Assured Partners was drawn up in Jim Henderson's backyard in Orlando. Aaron Cohen, an investor with the private equity firm GTCR, had traveled down with a partner after Henderson said he wanted to build something new. The idea fit, literally, "on the back of a napkin," Cohen said.

Cohen had built a relationship with Henderson over time after Henderson joined the board of Ironshore, an insurance company GTCR had backed. Henderson was a veteran insurance executive with a reputation as a gentleman and a winner, and Cohen has said he and his partner used to change seats at dinner just to sit next to him. After a couple of years, Henderson called them down to Orlando.

That backyard sketch became a business with more than $1 billion in annual operating profit. Assured Partners is an insurance broker, a middleman that helps businesses shop for coverage and then collects a commission on the policies it places. Cohen said "GTCR committed several hundred million dollars to Jim to build this company," and Assured grew to that scale before GTCR agreed last November to sell it to Arthur J. Gallagher for $13 billion.

The start was all conviction and almost no assets. Because so many people wanted to work for Henderson, GTCR funded about six positions with equity, including a president and a finance chief, before it owned a single agency. It was burning cash until it found a foothold, a small Cincinnati broker called Nice Lukens that had enough basic systems for Henderson to professionalize.

From there, sellers preferred Henderson's firm. People wanted to sell their agencies to him, and recruits wanted to join him, so, as Cohen put it, "we were winning ties because people wanted to be part of what Jim was creating."

GTCR and Henderson then decided to sell together, with Henderson arguing they owed a payday to the people he had recruited with the promise that they would share in the stock gains of a private equity owned company. The sale became one of the best investments in GTCR's fund.

Years later, Cohen was walking through Disney World with his young children when Henderson called. His new owners wanted to sell, Henderson said, so let's do it again. Cohen has called that the best phone call an investor can get, because the biggest risk in backing a chief executive, discovering you are not aligned, was gone. They bought Assured back almost six years ago and built it into a diversified broker with more than $1 billion in operating profit, before selling to Gallagher, a company Cohen described as a role model in serving midsize businesses.