Forced to find new lender, insurance agent finds refuge in SBA loan [Business Journal, The (Central New York)]

Jay E. Mack, CEO of the Mack, Mack & Waltz Insurance Group Inc., thought his company was doing well in 2010, but then he got a call from his bank. The Deerfield Beach, Fla.-based insurance brokerage was current on its credit line, but the bank didn't want its business.

"We were with them for 20 years," Mack recalls. "They told me they wanted to call every loan. I said back, 'Call them what?' They didn't think that was very funny."

During the 18-month ordeal with his bank, Mack says he was under constant stress. His company had purchased a building in 2007 and then made a significant acquisition in 2009, bringing on the business of now-partner and Executive Vice President Gregory Waltz. Those deals were financed with separate loans, but the bank wanted Mack, Mack & Waltz to repay the largest credit line.

After hiring a lawyer to get more time, Mack found a lender who was willing to consolidate the company's loans into one. In November, Mack, Mack & Waltz signed a $4.9 millionU.S. Small Business Administration-backed loan with 44 Business Capital. The 25-year loan carries an interest rate of prime plus 2.75%. it reduced the company's monthly debt service by $42,000.

Ed Narozny, 44 Business Capital senior vice president, says the company looked at Mack, Mack & Waltz as a whole and used both its real estate and its book of business as collateral for the loan. A 75 percent guarantee from the SBA was a big help, he adds. He believes this was the largest SBA 7(a) loan approved in Florida in 2011.

According to 44 Business Capital, it was able to leverage higher SBA loan limits. In 2010, the SBA increased the limit on its popular 7(a) general business loan program to $5 million from $2 million.

The lender is based in Blue Bell. Pa., and has an office in Kissimmee, Fla. It is a subsidiary of Sewell, N.J.-based Parke Bank. Although it doesn't have an office in Florida, Parke Bank is now Mack, Mack & Waltz's primary depository bank.

Mack says he was happy to switch banks. He uses remote deposit capture to deposit checks and his business doesn't use much cash.

With the new loan, the insurance agency retained its 43 employees and can continue hiring new agents, Mack says. It's a growth path that he's been on for several decades.

Mack and his brother Paul Mack got into the business by working at their mother's insurance agency in Monticello, N.Y. When that agency was purchased by a Virginia agency and relocated to Richmond. Mack decided he'd move to Florida and seek his own agency. In 1993, he bought a small agency with his brother, who is also a partner.

"At that point I wanted to get control of my life," says Mack, who was in his 30s at the time. "I couldn't stay there [Monticello] because it wasn't a booming area. And I liked warm weather."

When he bought the agency, it had about $400,000 in revenue a year. Mack entered the insurance industry a year after Hurricane Andrew blew a huge hole in the property insurance market. His company initially focused on construction and auto insurance. Later, it branched into neighborhood and condominium association insurance.

"When you start out you write anything you can, and as you go along you specialize," Waltz says.

In 2009, the company acquired Waltz's book of business - about $2 million in revenue a year - and brought him on board as a partner. Waltz says he was a "friendly competitor" with Mack and they would frequently talk about the industry. He specializes in insurance for neighborhood and condominium associations.

Mack, Mack & Waltz had $7 million in revenue in 2011. The business consisted of 70% commercial (including associations), 25% personal and 5% life/health insurance. The company handles insurance for a diverse group of industries, including financial services, dog tracks and manufacturers of all types, Waltz says.

Mack says the company grew revenue 10 percent in 2011 and expects to grow 11 percent this year - mostly on the commercial side. The agency is licensed in more than 20 states and has many multistate accounts. It represents more than 50 insurance companies.

One of the challenges of selling property insurance in Florida is that many insurance companies are on shaky financial ground. If a big storm hits, some companies may not survive, and the state's guaranty fund wouldn't cover all their claims. Mack says he prefers to refer clients to insurance companies with "A" ratings from A.M. Best Co.

The state-run Citizens Property Insurance Corp. often offers low rates, but Mack says he only uses it as a last resort. Waltz says that clients should consider customer service, quality and the value of what the policy covers, not only price, when buying insurance.

Waltz helps his customers avoid risks, but he doesn't mind taking a few calculated risks himself. He recently traveled to Africa to climb Mount Kilimanjaro.

MACK, MACK & WALTZ INSURANCE GROUP INC.

Jay E. Mack

1211 S. Military Trail, Suite 100, Deerfield Beach, Florida 33442

954-640-6225 * www.mackinsurance.com

1989

FOUNDED

43

EMPLOYEES

$7m

2011 REVENUE