CLIMBS THE LADDER

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					                                                                            Greg Belton

Reprinted with permission from the April 2007 issue of Canadian Insurance
                      C L I M B S
                                             HKMB                             T H E                          L A D D E R
                      Hunter Keilty Muntz & Beatty Leapfrogs the Competition
                                                                       By Barbara Aarsteinsen

                               hen Gregory Belton set out at        tioned in the Canadian market. People         with a number of insurance companies

                      W        the age of 29 to open his own
                               commercial brokerage in part-
                      nership with his 24-year-old business
                                                                    want more than two or three alterna-
                                                                    tives,” says Belton, president and man-
                                                                    aging partner. “We think the economy
                                                                                                                  but he was discouraged by the prospect
                                                                                                                  of enrolling in a five-year training pro-
                                                                                                                  gram “where you’d be stuck in this one
                      partner, John Hawkrigg, the consensus         here is diverse — growing and dynamic.        job forever and maybe you could move
                      was that they were “doomed to failure.”       So we see lots of opportunities in our        eventually.”
                      Their enthusiasm and ambition notwith-        immediate market as well as tremendous           Then Belton was offered a job as an
                      standing, Belton recalls, they were           opportunity in Vancouver and elsewhere        adjuster with Crawford & Co., which
                      warned by the brokerage community             in Canada.”                                   included being sent to Atlanta for
                      that they were too green and inexperi-           Thanks to its recent acquisition of the    training. Attracted by the idea of trav-
                      enced; they had never run any kind of a       Toronto and Vancouver offices of Morris       eling and working in the U.S., he took
                      business, let alone a brokerage, so what      & Mackenzie Inc., which were shed             the position in 1981. When he subse-
                      could they be thinking.                       when Morris & Mackenzie merged with           quently returned to Canada, he was
                          “We were told it was completely unreal-   Dale-Parizeau LM, HKMB now has a              assigned to London, Ont., where he
                      istic to believe we could acquire a bro-      formal Western base. That deal consti-        decided that smaller town life wasn’t for
                      kerage and be a success,” Belton recalls      tutes its third acquisition over the years    him. “I saw the writing on the wall,” he
                      with a laugh. “The prognosis was gloomy.”     and the priority now is to absorb and         remembers. “Crawford has hundreds
                          Belton can well afford to look back       integrate the latest addition.                and hundreds of little offices and they
                      with amusement. The privately held               “Our plan would be to just grow            just keep sending you all over the place.”
                      Toronto-based brokerage that he and his       organically now — to digest this and             Moving back to Toronto, Belton
                      partner bought 20 years ago has evolved       expand organically. We’ll look at some-       joined Firemans Fund Insurance Co.,
                      into Hunter Keilty Muntz & Beatty, a          thing if it comes along but it’s not really   working in claims until he “forced” his
                      leader in the commercial p&c industry.        something we’re out looking for,” says        way, he says, into underwriting and then
                      The founders had high hopes when they         Belton. “We may open offices in other         marketing because the company didn’t
                      brushed aside the skepticism of the           cities. We also think we have a big           have a formal training program that
                      naysayers and hung out their shingle but      opportunity in the employee benefits          allowed employees to move around in a
                      they moved even further up the ladder         area, which, although quite small here in     structured way. Trilon Financial Corp.
                      than they initially dreamed of.               terms of our overall size, has had a sig-     ended up buying Fireman’s Fund, which
                          Today, HKMB has more than $300            nificant rate of growth.                      became Wellington Insurance.
                      million in premiums and expects to               “In each of our specialty practice areas      At that point, Belton was in a mar-
                      reach $400 million within the next two        we see significant opportunities as well      keting position dealing with brokers and
                      years and top $450 million some three to      as possibilities in setting up new disci-     that exposure convinced him that he was
                      four years down the road. The business        plines. And then we’re just going to be       better suited to the intermediary side of
                      is about 93-per-cent commercial lines         very opportunistic in all other areas.”       the business. He and John Hawkrigg, an
                      with the remainder being about largely                                                      underwriting trainee, put their heads
                      VIP personal lines and some employee          BAPTISM BY FIRE                               together, got licensed and decided to go
                      benefits, which is a small but fast-          Some may think that Belton was des-           out on their own as brokers. Previously,
                      growing part of the portfolio.                tined to work in the insurance field, his     Hawkrigg had worked for CIBC, after
                          HKMB is also a partner in Assurex         father being industry guru Ted Belton,        having graduated from McMaster Uni-
                      Global, the largest privately held global     who published The Belton Report before        versity with a Bachelor of Arts degree.
                      risk management and commercial insur-         he retired. But the son studied political        The pair found a suitable acquisition,
Photo: John Hryniuk




                      ance network, giving it an international      science, not business, and when he grad-      a downtown Toronto, largely commer-
                      profile, exposure to foreign clients, and a   uated he debated his career choice. He        cial lines brokerage called Muntz Beatty
                      window on the world.                          considered banks and other financial          Inc., which traced its roots back to 1889
                          “We just think we’re ideally posi-        institutions. As well, he interviewed         and had been held in the same family for

                                              Reprinted with permission from the April 2007 issue of Canadian Insurance
             ROYAL CONNECTIONS
Greg Belton is involved in a raft of worth-                                                      ients of community service, now having to
while causes, charitable and profes-                                                             give community service and realizing in
sional, active in his community and in the                                                       doing that that no matter how badly off
business arena. He is a director of St.                                                          they are, there is somebody who is worse
Michael’s Hospital Foundation in Toronto                                                         off than they are, and that they have
and a member of the board of Salt &                                                              capabilities that they never realized. So
Light Television. Previous directorships                                                         that was a big eye-opener for them.
include the Toronto General Hospital                                                                  “The other thing is that participants
Foundation and the Toronto Insurance                                                             have to plan and execute an expedition,”
Conference. He is a member of the                                                                Belton continues. “Most urban kids go on
Young Presidents’ Organization, which is                                                         a camping or hiking trip in some remote
                                                 Greg Belton with HRH Prince Philip
made up of business leaders from across                                                          rural area but these kids live in one of
the globe, and he was chairman of the            thought they had more of a need for this        those areas. So their expedition was to
Upper Canada Chapter in 2000/2001.               program than any other young people. The        actually go to a city — Calgary. They had
    But perhaps one of Belton’s most             program is available to all young people,       never seen a traffic signal before or an
rewarding involvements — and certainly           rich or poor, whatever, but it seemed that it   office building or an intersection. It was a
his most high profile — has been with the        wasn’t getting to those communities really      whole other world. It got them out of the
Duke of Edinburgh’s Award, a non-com-            in need.”                                       circle of self-pity and drug and alcohol
petitive self-development program for                So Belton started a new initiative to       dependency; it broke that circle. And
young people around the world aged 14 to         raise money to allow the Canadian oper-         they’ve both gone on to be incredible
25 years old. The youth work on activities       ation to hire staff to tap into those less      successes.”
that help nurture life skills and are recog-     mainstream communities. The board was                Following his tenure as Canadian
nized with bronze, silver and gold awards        resistant to his efforts but Belton perse-      chairman, Belton was asked by the Duke
that are often presented by a member of          vered, reaching out to Prince Edward for        of Edinburgh to become a trustee and
the Royal Family. The program was                support.                                        help run the worldwide charity. At the
founded in 1956 by Prince Philip and now             “Three months later, we had five CEOs       time, there were three Royal Family mem-
operates in more than 100 countries.             of some of the largest companies in             bers and five non-royal trustees. Now he
Some 30,000 participants in Canada join          Canada at a two-hour lunch at Buck-             has been recruited as chairman of the
annually and about six million young             ingham Palace, at which we raised               program, a role that he formally assumes
people worldwide have participated.              $750,000. That was the beginning of this        in September.
    Belton was doing corporate fundraising for   initiative, which has now grown to involve           Prince Philip, as patron and founder,
the provincial Conservative Party in 1992        some 48 major Canadian corporations,”           had served as chairman until 2000,
when somebody he met through that                says Belton. “We raised millions and mil-       when he stepped down and was replaced
endeavour put him forward as a chairman for      lions of dollars, exceeding the budget          by the chairman of the Hong Kong Stock
the volunteer board of the Ontario division.     they had had heretofore by many multi-          Exchange and the Hong Kong Jockey
    “My predecessors had always been the         ples. We really expanded the program to         Club. After six years, that individual is
chairmen of banks or elder statesmen so          the at-risk community. It was something         giving up the helm and Belton has been
I was a bit of a departure because I was a       that I had started against the wishes of        given the honour of taking over.
younger entrepreneurial choice,” says            the board but I just thought it was the              “The term is a little unclear because
Belton. “When I came in I really didn’t          right thing to do — and it was the right        Prince Philip was chairman for decades, so
know anything about the program and I            thing to do.”                                   there really is no precedent. Given my rel-
asked a lot of questions, the answers to             Indeed, Belton remembers one recog-         atively young age, it’s possible I could be
which didn’t always make sense. So I             nition ceremony with particular                 chairman for awhile,” he says. “At any rate,
ended up making a lot of changes, which          poignancy and pride. He had been trav-          it’s all very exciting. It gives me a global lens
turned out to be quite positive.”                eling across Canada with Prince Philip,         on just everything. I have a great apprecia-
    Belton went on to become national            handing out hundreds of awards in big           tion for all the opportunities it gives — the
chairman in 1994, during which tenure he         cities like Montreal, Toronto and Van-          traveling around is wonderful. I’ve met the
pressed even harder for change, urging the       couver, when he asked His Royal High-           most amazing people.”
program to reach out to members of the           ness to accompany him up north to the                In fact, not only does Belton regularly
younger population who were being over-          tiny Arctic tundra community of Iqaluit.        meet and travel with the Royals but
looked — inner city youth, aboriginal                 “There were these two aboriginal kids      Prince Edward and his wife Sophie
youth, disabled young people, youth at           whom their teacher had picked out and           helped inaugurate HKMB’s newly redec-
risk, and kids in detention centres.             put in the program — the most disadvan-         orated offices last year.
    “I observed that this award program          taged kids in the school, truants with drug          “I think it’s important to have an out-
had not over the 35 years that it had been       abuse and sexual abuse in their back-           side perspective on our business,” he
in Canada properly adapted to the changes        ground,” Belton explains. “Here they            says. “It’s also important, obviously, to
in our youth population,” Belton recalls. “I     were, kids who their entire life were recip-    give back to the community.”


                       Reprinted with permission from the April 2007 issue of Canadian Insurance
almost a century.                             Corp. as a commercial underwriter, rela-         kerage that dated back to 1888, increasing
   “The same ambition that led us to buy      tionship manager and group leader.               its workforce to 100 people and once
a firm at that age and to believe in our-        “The four of us got along really well.        more doubling its size. The momentum
selves carried through the rest of our        We were all ambitious and hard-                  only built, with HKMB growing 300 per
thinking in general — that we would           working,” Belton explains. “It’s been an         cent organically over the next five years.
continue to get bigger and bigger and         incredibly successful partnership by every       At the same time, the management team
bigger and become more and more of a          measurement. Ask anybody in the                  was strengthened, Belton says.
player in the marketplace,” says Belton.      industry — the compatibility of the four             David Sharpless, a former partner
“But to reach the position where we are       of us has been our greatest asset. We’re all     with Blake Cassels and Graydon LLP
now in the industry relative to our com-      roughly around the same age — I am the           and a former chairman of Newcourt
petition, we never expected that.”            oldest, having just turned 49 — and we           Credit Inc., came on board as chairman.
   Muntz Beatty became partners with          have similar lifestyles and similar needs.       After 17 years in public accounting, most
Trilon’s Trivest Insurance Network Ltd.          “It’s not like we have a 63-year-old share-   recently with a high tech company in
Trilon later decided to exit that business    holder who’s thinking about exiting and a        Southern California, Rick White
and Trivest asked Muntz Beatty to buy         40-year-old shareholder who’s thinking           became chief financial officer. Charles
back its 25-per-cent minority stake. The      about the next 20-year horizon, which you        Lee, previously with MacLean Hunter
timing was good, Belton says, because the     often see in brokerages,” he elaborates.         Ltd., was named “chief people officer”
brokerage had paid off all its debt and was   “You’ll have this dichotomy and the princi-      and put in charge of human resources.
growing nicely. “That was our one and         pals may have different priorities. It’s hard        “We hired some very strong non-insur-
only outside investor. That helped us get     for them to come up with a long-term vision      ance management people, which has
into the business in the first place and      and plan for the company because they’re         allowed us to build the insurance side of
they were very good partners.”                looking at it through such different lenses.     the business while feeling comfortable
   At the same time, the brokerage               “We‘re all in our mid- to late forties.       that we have a very strong infrastructure
decided to hook up with Trivest’s other       We have similar ambitions and our out-           behind us,” says Belton. “Our governance
Toronto partner, Guthrie Keilty Bicker-       look on the future is very compatible.           is in order and our financial well-being is
staff, with which Muntz Beatty had            That’s been a considerable advantage.”           in order. We have two lawyers on staff.
become “friendly competitors,” Belton            Another key to success, Belton                We have a number of chartered account-
says. The two firms bought out Trivest’s      reflects, has been HKMB’s philosophy of          ants and MBAs. We have a very diverse
respective stakes in their operations,        not paying commission and offering,              and strong pool of smart and talented
joined forces and became Keilty Muntz         instead, the opportunity for profit              people.”
Beatty in July 1994 — more than dou-          sharing and ownership. That fosters a                HKMB’s third acquisition — the com-
bling in size and going from 10               more cooperative approach, he suggests.          mercial business of the Toronto and Van-
employees to 28. Premiums were about             “There is no disincentive to bringing         couver offices of Morris & Mackenzie —
$20 million.                                  in the D&O team to help you, for                 was made late in 2006. Morris &
   “We really took off after that,” says      example. In a commission shop, some-             Mackenzie is “another wonderful old
Belton. “We were bigger and that addi-        body might want the D&O person to                Canadian firm,” Belton says, primarily
tional size enabled us to go after larger     come in on an account but then they              commercial with “a great reputation, and
accounts and to get more resources and        have to split the commission,” he says.          good people — all the things that you
attract more people — to leverage our-        “Here, people bring in whomever they             would look for.” Particularly appealing
selves better. We were all playing chief      need; they get a lead in a specific area         was the opportunity to set up a physical
cook and bottle washer before and we          and if appropriate they will refer it to         presence in Western Canada.
could now push the business down to           someone else in the company who has                  Belton points out that there really
other people and to continue to elevate       more of an expertise. That collaborative         aren’t a lot of suitable takeover targets for
the role that we had within the company       environment is very important.                   a company with the size and profile of
and play to our strengths.”                      “I honestly think that most brokers           HKMB so when the Morris & Mackenzie
   Describing their relationship as a         are a collection of individual, commis-          opportunity came up the firm didn’t want
“textbook partnership,” Belton attributes     sion-paid producers who come together            to miss out on what seemed a perfect fit.
a large part of that success to the cama-     for the purpose of having access to the              “We got what we wanted, which was a
raderie and rapport between the four          insurance markets. They act like a com-          commercial book of business, a little bit of
HKMB principals — himself and                 pany whereas we actually are a company.          employee benefits and a little bit of VIP
Hawkrigg plus Robert Keilty and Neil          We would never have 50 people leaving            personal lines — but, overall, 98 per cent
Morrison, who turned the original duo         and taking all their business with them.”        commercial,” Belton outlines. “We were
into a quartet with the merger. Keilty,                                                        confident because we thought that we were
who received a Bachelor of Arts degree        ONWARDS AND UPWARDS                              probably the best home, the most compat-
from the University of Western Ontario,       Following that first merger, Keilty Muntz        ible place for those people and that book of
came on board with several years experi-      Beatty went on to double its business            business. But there was competition.”
ence at a major Canadian insurer and with     again over the next four years. In 1998,             As with its two earlier acquisitions,
a broker in the Lloyd’s market. Morrison      with staff of about 60, the firm acquired        HKMB would now like to digest its latest
had previously worked for Continental         Hunter Rowell Ltd., another older bro-           purchase for a while and pursue further

                       Reprinted with permission from the April 2007 issue of Canadian Insurance
                                          organic growth. If an appealing opportu-        the top privately owned commercial insur-
 PAPAL                                    nity were to arise, the firm would cer-
                                          tainly consider it, Belton says, but it’s not
                                                                                          ance brokers,” says Belton. “They inter-
                                                                                          viewed us and six or seven other firms. We
                                          out looking. He thinks it’s probably best       were probably the smallest at the time but
HONOUR                                    to stick with HKMB’s tried-and-true for-        I think they saw in us that we had a lot of
                                          mula of pacing its transactions.                potential. We were quite enthusiastic
Last fall, Greg Belton was knighted          “Our thing when an opportunity has           about the opportunity.”
— but that investiture was not            come along has always been to make the              As a result of its Assurex membership,
related to his involvement with the       acquisition and absorb it. Then on the          HKMB has more than 600 foreign-based
Duke of Edinburgh’s Award. This           heels of every one that we’ve done we           accounts that it services for its partners
was a special papal recognition,          had just tremendous organic growth,” he         around the world. But that exchange of
                                          notes. “If you look at our total revenue        business is only part of the benefit of the
the highest honour that the
                                          now, a third of it has come from business       association, Belton says. Equally impor-
Catholic Church can confer upon           that we have acquired and the remaining         tant is the sharing of best practices,
laity — becoming a member of the          two-thirds has been organic. So while           benchmarking and joint problem solving
Equestrian Order of the Holy Sep-         some people may think we have grown             that goes on, he adds.
ulcher of Jerusalem. The chivalric        largely through acquisition, it only rep-           “We are peers in non-competing, non-
order is one of the oldest contin-        resents a third of our revenue.”                overlapping territories, so we try to reach
                                             With the Morris & Mackenzie deal,            out and help each other,” he says. “There’s
uous knighthoods in existence,
                                          HKMB will not only be adding people in          a lot of networking. Assurex will have an
tracing its roots back to the First       Vancouver but another 50 in its Toronto         annual conference for chief financial offi-
Crusade.                                  office. That talent will help strengthen        cers, an annual conference for sales man-
    “Out of the blue I was called by      some of the firm’s existing practices and,      agers, an annual conference for claims
the Cardinal’s office here in Toronto     in some cases, create new ones. “They           managers. Then, the network owns an
and informed that I had been nom-         have a book of business, we have a book         errors and omissions captive insurance
                                          of business and then we have enough of          company and several other companies in
inated for this recognition. I had no
                                          that business in a particular industry          the U.S, so we have premium financing,
idea whatsoever why I was chosen
                                          sector to create a new specialty,” he says.     we have errors and omissions insurance,
or who nominated me,” says                   “All of the specialties are growing in       we have a company that does perpetuation
Belton. “I have learned since that        the double digits — or in some cases            loans for its partner firms.”
people who are chosen are, of             more — and they’re all totally dedicated            From 2003-2005, which spanned the
course, all practicing Roman              practice areas. For instance, we’re not         fiftieth anniversary of Assurex, Belton
Catholics. There are millions of          just saying that because we have a bunch        became the group’s first non-American
                                          of entertainment business we have a             chairman, having previously served as
those in Canada.
                                          practice area. Our sports and entertain-        chair of the international executive com-
    “They are also typically people       ment practices totally does sports and          mittee, the sub-board responsible for
who are very successful in whatever       entertainment, nothing else.”                   developing the global business. He
their field of endeavour is, whether it                                                   served two terms — another first in the
is academics or business or what-         INTERNATIONAL                                   organization’s history — and is currently
ever; they’re at the top of their game.   Thanks to his involvement in charitable         chairman emeritus.
                                          causes, Belton travels the world fre-               “We have a unique ability in Canada, I
And again, there are many, many
                                          quently and extensively. That experience        think, among the privately owned firms
people who are Roman Catholics            on the personal front inspired an interest      to handle multinational business, both
who are successful,” he explains.         in somehow making his business life             foreign-owned firms with Canadian
“So the dividing line, I guess, is that   more international. The chance to               operations but also Canadian companies
it is people who have significant         realize that aspiration came in 1996,           that have operations in other countries,”
involvement in charitable works,          when HKMB was approached by                     says Belton. “We’re continuing to work
                                          Assurex Global Partners, which was              with our international partners around
often on a global scale — not neces-
                                          looking for a new Toronto partner.              the world to strengthen that capability
sarily for the Catholic Church. And
                                             Assurex, which was founded in 1954 in        because it really sets us apart.
that really narrows the field down —      Columbus, Ohio, brings together in a global         “It allows us to compete with the
successful Roman Catholics who do         network more than 20,000 insurance profes-      multinationals. That’s one of the Achilles’
global charity work.”                     sionals at 118 independently owned insur-       heels, of course, of a private firm — you
    A formal ceremony was held in         ance brokerages on six continents, generating   don’t have the ability to service business
Toronto and Belton remembers the          premiums in excess of $23 billion (US).         outside of your own borders. Well, we do
                                             “The partner that Assurex had here had       have that ability. So it allows us to com-
event as “extremely moving — a
                                          been sold and that triggered a search for a     pete with them and we think that’s a huge
once-in-a-lifetime kind of thing.”        new firm. Unbeknownst to us, it had gone        competitive advantage over other pri-
                                          to the major carriers and asked which were      vate-run firms.”   h
                Reprinted with permission from the April 2007 issue of Canadian Insurance