Usi Corporation · TWSE:1304
Usi — Investor Presentation (February 2004)
34 slides from Usi's investor presentation, Feb 26, 2004
Slide 1: New Realities, New Solutions
U.S.I. Realities, “New February, Holdings 2004 Corporation New Solutions”
Slide 2: About This Presentation and Forward-Looking Statements
About This Corporation, its the actions All projected When although forward-looking these “Management’s qualify 1 business integration statements document plans, used Forward-Looking all and not costs, forward-looking in conditions strategy; intentions all which this other of and prospects forward-l
Slide 3: Market Data
Shares 52 Market Ticker Dividend: Analyst Jay Charlie Jon David Jason Nick 2 Week Cohen Balkind Pirsos Busell Lewis /Outstanding: Data Capitalization: Gates Listing: Research: Range: None Merrill Sandler Fox-Pitt KBW SunTrust CSFB “USIH” $9.68 Lynch David O’Neill 46,680,952 $452 – $14.73 /Sheusi NAS
Slide 4: USI Stock Price Performance Since IPO
USI Stock Relative USIH AJG BRO HRH 3 +22.7% +8.7% -25.2% +43.0% Stock Price WSH Price Performance +5.8% Performance HBG +1.8% Since IPO
Slide 5: USI: A National Middle Market Broker
USI A National Middle Broad Demonstrated – 4 Approximately Aggregation 9th Leading 59 400+ USI 5Property 47% Market broad Profile Offices largest has Product of sales Market Scale top product Leader less Benefits &in U.S. professionals 400 casualty, Cross-Selling of than Resources with 19 Focus 60,0
Slide 6: Investment Highlights
Investment Consistent Focused Augment Experienced – 5 Target Diversified 5Proven, 21.7% 28% Substantial 5%-10% ofinUSI at in strategy 3growth proactive organic least 2003 to Highlights and fully revenue 5 years 10% motivated for with % diluted growth cross-selling of EBITDA of mix accretive personal
Slide 7: Diversified Revenue Stream and Large Geographic Footprint
USI’sWest Diversified Property Group Specialized Total National USI Corporate Note: 6 Midwest Northeast Southwest Southeast 2003 Percentage Broad Employee Scale and Coast Retail Revenues Revenue Benefits Array Casualty 7% 44% 16% and 10% 24% Offices figures Benefits of Local Services Stream =Product
Slide 8: USI's Broad Array of Benefit and Property Casualty Products
USI’sBenefit Insurance Property General Workers’ Fidelity Professional Personal Affinity Group Specialized Dental Disability Life Health Defined Related Employee Enrollment Core Critical Bank Company Executive Estate Individual 7 Benefits Owned Broad Planning Employee and Care Legal/Compliance and C
Slide 9: Historical Perspective: Controlled-Growth Acquisition Strategy
Historical With Acquisition Pursued Majority Including Limited Integration Consolidated Improved Strengthened Standardized Reduced Increased Align Exit IPO Debt/capital S&P – Common Controlled-Growth New 7 Leverage Proactively Pursue 1994 Growth 8 Regional Interest Only consecutive successfully non-
Slide 10: Experienced Management Team
Experienced Name David Tom Jeff Bob Ed Ernest 130 Experience Team 9 Bowler Jones years Schneider O’Neil has Position Eslick Newborn worked experience Chief Senior with Chief Senior Chairman, EVP Industry Marketing 200+ Senior together VP, Operating Management &–Corporate acquisitions Chief middle VP
Slide 11: Lean and Efficient Operational Strategy
Lean Efficient Revenue Senior – 102% Corporate 5.5% 4% Operational Employees Clients Markets ofmanagement inof 3—5 total but growth 2003not employment years managers revenue Office bureaucratic willisexceed close Strategy to corporate key constituents expense growth – flat structure
Slide 12: Optimal Operational Oversight and Workflows
Optimal Intensive Quarterly Compliance -Institutional 11 Workflows Technology Standardization Risk Quality Practice Branding Financial Policies Operational Sales Procedures Real Estate Management Strategy Management Operational Process review Groups face - with Consistency Operational to of face ent
Slide 13: USI Delivered on 2002 Commitments
USI 2002 Complete De-leverage Clean 8 Margin Strengthen On Results 40.1% Positive 8.1% 660 Bob Ed Jeff 12%—10% Bowler October Jones bpts Has Schneider Commitments in operational atexpansion 2002 cash Delivered reported, 12/31/02 IPO promoted in management organic 21, balance flow charge appointed 20
Slide 14: USI Delivered on 2003 Commitments
USI 2003 Ratings Restructure Clean 8 EBITDA Acquire April, Results 7 223% Acquired 13%—10% consecutive Has Commitments operational earnings 2003 upgrade 10% Delivered margin $26 organic credit S&P prior quarters million growth expansion increased and agreement year’s on revenue of financial its of 2
Slide 15: Proven Cross-Selling Opportunity: Top Accounts
Proven Top Benefit Account Sold 14 15 business clients Strategy P&C Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Pers. or ranked Business and currently Life Opportunity byDisability Property revenues being provided & Estate Cross Package Sell Comp to client Matrix Casualty Def.Proposed GL Umbrella and p
Slide 16: Cross-Selling Strategy
Cross-Selling Single Strategy Definition Compensation Aggressive Benefits Improved Cross-selling Reduced Product 15 distribution diversification yacquisition client Cross-selling oflocal cross-sell is perpetuates Enables and aretention management MANDATORY point recognition costs USI and must levera
Slide 17: Cross-Selling Success: Product Categories Sold
Cross # Categories 1 2+ 3+ 4+ 5+ Increase 16of0 or10more 7 4 Product 039Selling 14 662Decrease 025 173 67 28 15 Sold Top 15 189 Success 2002 400 15 Accounts 400 2003 2002 Top2003 400 Accounts
Slide 18: Proactively Integrated Sales Management
Sales -Proactively Integrated Personal “What 17 Standardized Senior Formalized Standard Management you management accountability sales technology measure manage goal client weekly philosophy setting stewardship sales and involvement platform sales review and behavior, drives meetings pipeline for ge
Slide 19: Organic Revenue Growth
Organic (-7%) Lost Non-Recurring (-6%) (-8%) Gross (+23%) •(+25%) Rate (-4%) (+4%) (+2%) 18Actively Formal Increase 8% Shifting Consistent SFA Cross Proactively Superior “Best P&C Exposure Business /offor (-11%) New Exp. and Efforts” selling current Growth stewardship 100% contracts penetration mana
Slide 20: Strategy Continued: Reduction of Expense Ratios
USI Strategy Continued Reduction – Each EBITDA Results 2004 23.4% 2003A 21.7% 2002A 17.8% 2001A 11.2% 19Organic Continued Internal Sharing Has Analyst 100For Expanded margin bps and of growth in revenue streamlining best Margin compensation operating of external EBITDA practices and growth itsExpans
Slide 21: Strategy Continued: Margin Expansion Plan
Strategy Continued -Reduction Incentive Each 20 Organic Continued Use Elimination Employee Fold-in Internal Consolidated Standardized Peers 100 ofare technology for acquisitions and compensation bps growth in revenue 400–500 100–300 hire Future streamlining compensation operating of external regiona
Slide 22: Plan for Margin Expansion vs Peers BRO and HRH
Plan for 23.9% 25.7% 26.8% 1999 24.9% 27.1% 29.1% 37.8% 2002 17.8% 28.1% 36.1% 2001 11.2% 26.0% 33.0% BRO 2003 21 HRH 21.1% 22.3% 25.0% 21.7% Margin USI 1997 1998 2000 Expansion is Clear and Has Been Achieved in the Past by Peers
Slide 23: Highly Disciplined Acquisition Strategy
USI Highly – Disciplined At Strong Current Fold-in Must Immediate Avoid Every 22 target USI’s least Plans subscribe show be acquisition auctions management fragmented acquisitions highly geographic 10% accretive to and ability acquisition Augment ofexperienced aggressive to prior-year that to USI to
Slide 24: 2003 Disciplined Acquisitions
2003 Disciplined Agency Guild Hastings BMI O’Leary-Kientz Benefits Diversified Total = 23Meets Insurance Acquisitions $Agency 25.5 Revenue = Team Tapley Does Insurance Criteria? $$$2.4 Not $1.9 4.5 (MM) 4.1 11.8 Westbury, Houston, Long Cincinnati, $Boston, 0.8 Location Beach, Chicago, TX NY Mass OH
Slide 25: Financial Overview
U.S.I. Holdings Financial Overview Corporation
Slide 26: USI Income Statement
USI Income ($ 2003 Total Operating EBITDA Non-Operating Before Income Net 25 of Income 2002 Revenues Income Income Tax (Loss) in 77,115 Expenses 2001 thousands) (Loss) Benefit Statement Taxes From Tax Expenses $63,189 354,802 From $ Expense/Benefit (3,885) 277,687 Continuing Discontinued 35,529 213
Slide 27: USI Balance Sheet
USIExcluding ($ 2003 Operating Assets Intangible Liabilities Term Revolving Seller Other Total (a) 26 Balance Assets 2002 Current Debt Stockholders’ Liabilities Loan Assets Current Liabilities Notes inCash Assets Credit 160,021 2001 124,688 thousands) $and Sheet 24,141 Liabilities current Assets 670
Slide 28: Leverage and Coverage Analysis
Coverage ($ 2003 Term Debt: Facility Seller Stockholders’ Total EBITDA/Interest Debt/EBITDA Leverage: Debt/Total FFO/Debt (a) 27 EBITDA 2002 Debt Capitalization Loan Notes $thousands) 124,688 &42.8% $2001 Capitalization and Leverage and defined 160,021 Equity 2.1x Revolving Other 31.7% (a) $2.3x $85
Slide 29: The USI Story
The Consistency Significant Strong Sales Motivated – 28Aligned Revenue Cross-selling Sales 22% Growing Disciplined USI Centrally Behavior Client Cross New USI Management story 28% Acquisition account management selling retention Story on and diversification high Margin management managed is in of go
Slide 30: Management Biographies
Management David 1998 served Ohio-based Thomas Pelton, Jeffrey Mr. Officer 29 Eslick O’Neil Jones and L. as L. Inc., ofE. Eslick—Chairman, Senior has Jones—Senior became TriWest has O’Neil—Senior became subsidiary aBiographies been New been Vice CMO Insurance aYork-based Chief Chairman director Pres
Slide 31: Management Biographies (cont'd)
Management Robert where billion Frank Edward President, September Ernest Mr. Inc., the 30 time Schneider Bowler Newborn anB. he J. IPO. S. Indiana–based J.of Newborn, Hall was Schneider—Chief Finance Bowler—Senior 1997, his became Mr. Biographies has responsible &joined tenure, Schneider Co. Mr. ser
Slide 32: Board of Directors Biographies
Board Thomas KMK Group. American Underwriters. Robert Andersen York L. Mr. 1989 Fellow coaches Governance 31 Ben Wright Hayes Lytle State toConsulting of F. Lytle Additionally, and October and A.Directors Wright has LLP. Financial has Society Hayes has Trustee Committee recreational served He served
Slide 33: Board of Directors Biographies (cont'd)
Board Richard President Ronald insurance, Cross CPA Robert Mr. Partner Insurance with currently 32 Haverland Frieden Spass the Society and of A. and E. M. insurance Directors serves of Investors, Spass has Blue Frieden insurance Haverland Co-Founder retired Great and served has Shield on Chairperson
Slide 34: New Realities, New Solutions
U.S.I. Realities, “New February, Holdings 2004 Corporation New Solutions”