NFP to continue acquisition strategy

NEW YORK — National Financial Partners Corp. will continue to pour money into acquisitions this year. At a recent conference for analysts and investors, company officials disclosed that they have earmarked $20 million to spend on acquisitions this year, a $5 million increase over 2006’s allocation.
MAR 26, 2007
NEW YORK — National Financial Partners Corp. will continue to pour money into acquisitions this year. At a recent conference for analysts and investors, company officials disclosed that they have earmarked $20 million to spend on acquisitions this year, a $5 million increase over 2006’s allocation. They also suggested that analysts lower their expectations for long-term earnings growth to between 15% and 20% a year, down from a firm 20%. The lowered guidance came one month after New York-based NFP disclosed that “same store” fourth-quarter revenue declined by $18 million, or 7.2%, largely due to a reduction in life insurance sales, firms or assets that are sold, and other adjustments. That compares with the 31.6% same-store revenue growth NFP posted during the fourth quarter of 2005. Overall, same-store revenue growth increased 5.4% last year, compared with a 22.4% increase in 2005, the company said in its fourth-quarter earnings report, which was released last month. New York-based Goldman Sachs & Co. analyst Joan Zief called the downward pressure on growth “incrementally negative, in the sense that it is an admission by management that 20% long-term growth is not feasible with same-store revenue growth in the high-single-digit range and even $20 million in base earnings acquired.” Management’s call for lower earnings growth beyond 2008 “should not come as a surprise,” she said in her research note. NFP’s growth may be slowing, but the company continues to expand through acquisitions. This year, it closed its acquisition of the executive-benefits firm Balser Cos. of Atlanta, which represents $7.4 million in acquired base earnings. The acquisition is NFP’s largest deal to date. The firm has acquired $17 million in base earnings so far this year, after acquiring $21.4 million in all of 2006, according to the company. NFP “can handle larger acquisitions,” said Elliot Holtz, executive vice president, marketing and firm operations, at NFP Securities Inc. in Austin, Texas, calling Balser “an institutional-quality organization” and a “transitional” acquisition. Balser focuses on executives from leading Fortune 500 companies, he said. NFP estimates that there are more than 4,000 potential firms to acquire in the current market. Mr. Holtz stressed that the company is well diversified, with 60% of its firms in life insurance, 30% in executive benefits and 10% operating as registered investment advisers.

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