Lehi's PCF Insurance Services Lands $400 Million in New Incremental Debt Financing

This is the second $400 million debt financing PCF has closed in the past nine months, the prior one occurring in August 2023, with both led by Blue Owl, a global alternative asset manager that acted as lead arranger and administrative agent. 

Concurrent with this incremental debt funding, PCF has also negotiated an interest rate reduction of 0.5% for the "majority of its debt" (aka, a drop of 50 basis points). As a result, the company expects to see "... a significant annual savings in ongoing interest expense."

Lehi, Utah-based PCF Insurance Services has just closed a $400 million round of incremental debt financing, an undertaking led by Blue Owl.

According to the news release announcing the new funding, PCF also concurrently negotiated an interest rate reduction of half-of-a-percent (aka, 0.5% or 50 basis points) for the "majority of its debt."

As a result, the company expects to realize "... a significant annual savings in ongoing interest expense."

This is the 2nd time Blue Owl has provided PCF with a $400 million round of incremental debt financing, the last time being in August 2023.

The Dramatic Seven-Year Ride of PCF Insurance Services

As reported by Utah Money Watch in August 2023 in "PCF Insurance Services - A 5X, Utah-based 'Unicorn' Hiding in Plain Sight - Lands $400 Million in Incremental Debt Financing," the Utah-based insurance brokerage now known as PCF Insurance Services was virtually invisible on the internet from its 1987 founding in southern California as Peter C. Foy & Associates Insurance Services until 2017.

But since then, however, PCF has reinvented itself, with

• Outside equity investments,
• The sale of majority control to HGGC, a significant private equity firm headquartered in California,
• The buyback of majority control from HGGC by PCF's executive team, plus
• A subsequent significant equity investment into PCF by Carlyle Group, as well as
• Substantial debt financings that allowed PCF to acquire over 100 brokerages in 2022 alone.

Today, PCF offers Commercial, Employee, Medicare, Personal, and Specialty insurance coverages for businesses across 15 industries, namely

• Cannabis,
• Construction,
• Contractor,
• Education,
• Entertainment,
• Farming,
• Financial,
• Healthcare,
• Hospitality,
• Legal,
• Manufacturing,
• Professional Services,
• Real Estate,
• Sports, and
• Transportation.

As a result, Insurance Journal recently reported that PCF is now the 12th largest Property/Casualty insurance brokerage in the United States with nearly $529 million in PC billings in 2023, up from PC revenues of $470 million in 2022 and $176 million in 2021.

And yes, that's a mind-blowing 3X jump in PC revenue for PCF in just two years (2021 to 2023).

Additionally, Insurance Journal also reported that PCF produced an incremental $108 million in other fees during 2023.

Not surprisingly, Business Insurance separately ranked PCF as the 20th largest insurance broker in the U.S. for 2023 with revenue of $730 million, an increase of 23.7% over 2022 revenue.

Put into perspective, PCF now owns 140+ brokerages in nearly 40 states, with over 4,000 employees scattered across more than 280 locations the U.S.

And although PCF's roll-up strategy took a clear pause in 2023, a quick review of the company's newsroom shows it has acquired three independent brokerages since the beginning of 2023.

Not a ton of M&A activity of late, to be sure, but acquisitions nonetheless.

That said, PCF has dramatically upped its game from an executive management perspective by hiring or promoting seven senior leaders in the beginning of 2024, when it separately announced a new

• SVP and Treasurer (promoted),
• SVP of Finance, Chief of Staff (promoted),
• SVP of Operations (promoted),
• Chief People Officer (promoted),
• Chief Development Officer (hired),
• General Counsel (hired), and a
• Vice President of Marketing (hired).

Such high-level executive changes in a 4,000-person firm, especially one that has grown so significantly during the past few years, suggests to me that more change is afoot.

In fact, after taking all of this information and throwing it into a "metaphorical blender," this journalist suspects that PCF Insurance Services may be on the cusp of other transformative endeavors in the not too distant future.

In other words, we'll keep watching.

And depending upon what we learn, we'll let you know.

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