Bob Hilb is back in deal-making mode and back in the CEO chair.
The veteran Richmond insurance broker has been named CEO of Virginia Beach-based Choice Financial Group, a fast-growing firm in a series of agency acquisitions that Hilb plans to maintain and hopefully accelerate.
The new role marks Hilb’s return to a leadership position in the industry, having been downplayed following his abrupt departure from his eponymous firm Hilb Group in 2017.
“I went underground for about four years,” Hilb said.
A non-compete agreement kept him out of the game for a while until he started consulting for other firms — which led him to Choice.
“When my non-compete came in, I opened a small consulting practice and pretty quickly took on three to four different clients and it was all about helping people acquire agencies. One of those customers was Choice.’
Hilb said he advised Choice founder Richard Brown when the company began a plan to acquire agencies across the country, including in Richmond.
From 2019 to 2021, Choice closed 11 acquisitions and grew from $2 million in annual revenue to about $15 million.
Brown then closed a deal to sell Choice to private equity firm Northlane Capital Partners, which coincided with Hilb joining Choice full-time to run its M&A business.
After the ink dried for a while on the Northlane deal, Hilb said Brown was ready to step down, and Hilb was asked to step in as CEO. The offer meant coming further from the sidelines, something the 59-year-old Hilb wasn’t sure he wanted to do.
“I had no great desire to come out of retirement. After the Hilb Group sold in 2019 (to the Carlyle Group), there was no need for me to go back to work,” he said. “But I see an opportunity to finish something I started a long time ago and finish my career the way I wanted to.”
He officially took the helm as CEO on July 12. Choice’s headquarters will remain in Virginia Beach, while Hilb will maintain an office here in Richmond. The company has about 200 employees, most of whom work in the individual agencies it has acquired.
Just as at Hilb Group, Hilb’s task at Choice is to grow aggressively by acquiring independent insurance agencies. The Hilb Group acquired about 40 agencies and grew to over $80 million in revenue during Hilb’s tenure. He said Choice has completed seven deals since taking over M&A full-time in November.
He said more deals are in the works and his goal is to reach $45 million in annual revenue by closing all the deals he is currently working on.
“Do I think we can get Choice to $300 million to $500 million (annual revenue)? Absolutely,” Hilb said.
However, the competition for acquisitions is stronger these days than it was when Hilb started Hilb Group 12 years ago. Private equity firms of all stripes have sunk their teeth into the insurance broking business, keeping demand and prices steadily rising even during the pandemic.
“It’s a very different market,” Hilb said. “In 2010, there were 300 deals a year. Today there are over 30 private equity backed brokers. Last year there were between 800 and 1,000 deals. It’s a seller’s market unlike anything I’ve ever seen.
Hilb said Choice’s competitive advantage is that sellers can get in early and take some of their proceeds into Choice ownership stakes before the next round of private equity.
“Private equity likes to be able to model something where it knows that if it has the right leadership team, every three to four years it will get three to four times the return,” Hilb said.
He said he learned from his departure from the Hilb Group, although he still regrets it.
“I look back on that time now and the growth that came out of that experience is something I’m really grateful for. But it was difficult at the time,” he said. “It just wasn’t an ideal ending.”
He said his move to Choice should not be seen as his attempt to build something like Hilb Group 2.0.
“You can look at it that way, but I don’t. Hilb Group is a huge company. They are a great business. $500 million in revenue.”
Still, he admits he has mixed emotions to see his name still atop what is now his bigger competitor.
“Yeah, that’s a little weird. I won’t lie to you, he said.
But there is also a certain pride that the family name still flies on the flag. He started the Hilb Group after working at his late father’s firm, Hilb, Rogal, & Hobbs (HRH), before it was acquired for $2 billion in 2008. He said his late father was always frustrated, that the surname did not remain when H.E. was sold.
“When I started the Hilb Group, one of my goals was to bring the Hilb brand back to the industry,” he said. “So we certainly achieved that.”