Newtek Insurance Agency - Comprehensive Analysis Report

Summary

Newtek Insurance Agency is a U.S.-based, nationally licensed, full-service insurance agency and a subsidiary of NewtekOne, Inc. (NASDAQ: NEWT). The agency is an integral component of NewtekOne's comprehensive suite of business and financial solutions, focusing primarily on the small and medium-sized business (SMB) market. Its mission is to be a one-stop-shop for the risk management needs of independent business owners by providing a wide array of competitive and comprehensive insurance products. Licensed in all 50 states, the agency leverages its relationships with numerous highly-rated carriers to offer commercial, personal, and health and benefits insurance lines, positioning itself as a holistic risk management partner.

1. Strategic Focus & Objectives

Core Objectives

• Serve the SMB Market: The primary objective is to cater to the insurance needs of small and medium-sized businesses across the United States.

• Cross-Selling: A core strategy is to cross-sell insurance services to the existing client base of its parent company, NewtekOne, which includes businesses utilizing its lending, payment processing, and technology solutions.

• Client Advisory: To act as trusted advisors by providing complimentary, no-obligation reviews of existing coverage to identify gaps and potential cost savings for clients.

Specialization Areas

• Comprehensive Commercial Lines:

• Business Owner's Policies (BOP)

• Workers' Compensation

• General and Professional Liability

• Commercial Auto and Property

• Cyber Liability

• Industry-specific policies

• Personal Lines: The agency also provides personal insurance to business owners and their employees, including homeowners, auto, life, and disability coverage.

• Multi-Carrier Approach: The agency partners with over 40 highly-rated carriers to source competitive rates and comprehensive coverage, creating customized solutions for clients.

Target Markets

• Primary Market: Small and medium-sized businesses (SMBs) in the United States. Newtek leverages its parent company's ecosystem to access and serve this market.

• Secondary Market: The agency targets the personal insurance needs of business owners and their employees, creating additional value and deepening client relationships.

2. Financial Overview

Funding History

As a subsidiary of the publicly-traded financial holding company NewtekOne, Inc. (NASDAQ: NEWT), Newtek Insurance Agency's financials are consolidated within the parent company's reports. This structure provides a stable financial foundation and access to capital markets.

• 2023 Performance (NewtekOne, Inc.):

• Net Income: $43.0 million

• Basic Earnings Per Share (EPS): $1.71

• Diluted Earnings Per Share (EPS): $1.70

• 2024 Forecast (NewtekOne, Inc.):

• Annual EPS is forecasted to be in the range of $1.80 to $2.00.

3. Product Pipeline

Key Products/Services

Newtek Insurance Agency offers a full suite of insurance products available across all 50 states.

• Commercial Insurance:

• Description: A broad range of policies designed to protect businesses from various operational risks. This includes Business Owner's Policies, Workers' Compensation, General Liability, Professional Liability, Commercial Auto, Commercial Property, and specialized Cyber Liability insurance.

• Development Stage: Actively marketed and sold.

• Target Market: Small and medium-sized businesses across diverse industries.

• Key Features: Customized coverage sourced from over 40 carriers to ensure competitive pricing and comprehensive protection.

• Personal Insurance:

• Description: Policies tailored for individuals, primarily business owners and their employees. Offerings include homeowners, auto, life, and disability insurance.

• Development Stage: Actively marketed and sold.

• Target Market: Business owners, executives, and employees of client companies.

• Key Features: Provides a convenient way for clients to manage both their business and personal risk in one place.

• Health & Benefits:

• Description: Employee benefits packages, including health insurance, designed to help SMBs attract and retain talent.

• Development Stage: Actively marketed and sold.

• Target Market: Small and medium-sized business owners seeking to offer competitive benefits packages.

• Key Features: Integrated solutions that can be managed alongside other business services through the NewtekOne platform.

4. Technology & Innovation

Technology Stack

The agency's operations are enhanced by the proprietary technological infrastructure of its parent company, NewtekOne, which is central to its integrated service model.

• Newtek Advantage™ Platform: A cloud-based operating platform that gives clients single sign-on access to all of NewtekOne's services, including insurance. The platform features a dashboard for analytics, transactional capabilities, and secure document storage, creating a seamless integration of insurance with services like payroll and payment processing.

• NewTracker® Software: This patented prospect referral and management technology streamlines the client lead process across all of NewtekOne's divisions. It enables the efficient management and conversion of leads generated from other business lines into insurance clients.

5. Leadership & Management

Executive Team

The agency operates under the strategic leadership of the NewtekOne executive team.

• Barry Sloane: President, Chairman & CEO of NewtekOne. Sloane provides the overall strategic direction for all business units, including the insurance agency. He has led the company since 1999.

• Peter Downs: Director & President, Newtek Bank, N.A. With NewtekOne since 2003, Downs' role in the banking division is critical for driving cross-selling opportunities into the insurance agency.

• Brett Siegel: Vice President of Insurance Services. Siegel is a key leader directly managing the insurance division within NewtekOne.

• Adam Altman: Regional Vice President. Altman oversees the client referral process between the insurance division and other NewtekOne companies and is involved in developing the national business model.

• Richard A. (Rick) Carpenter: Director of Property and Casualty. With over 30 years of experience, Carpenter is responsible for the placement of all commercial and personal lines insurance business and oversees the strategic and financial direction for all Property and Casualty lines.

6. Talent and Growth Indicators

Hiring Trends and Workforce

Newtek Insurance Agency is actively recruiting for multiple roles, signaling a focus on expansion and enhancing service capabilities.

• Current Hiring Patterns: Recruitment is focused on strengthening both commercial and personal lines, as well as operational support.

• Key Roles Being Recruited:

• VP, Insurance Services - Personal Lines Specialist

• Customer Service Representative – Commercial Lines Insurance Specialist I

• Insurance Operations Coordinator - Commercial Lines

• Company Culture: The company emphasizes a fast-paced environment with significant opportunities for professional growth. It offers a comprehensive benefits package, including a 401(k) with an employer match, to attract talent.

7. Recognition and Awards

Industry Recognition

While specific awards for the insurance agency are not prominently featured, the company's performance and technological backbone have received positive attention.

• Customer Testimonials: The company's website features numerous positive testimonials praising its knowledgeable agents, responsive customer service, proactive approach to renewals, and ability to handle complex insurance needs.

• Technology Partnership Award: NewtekOne’s partnership with Apiture for its digital banking platform was named the "Most Effective Bank-Fintech Partnership" at the IBSi Global FinTech Innovation Awards 2024. This award highlights the strength of the technology platform that underpins all of Newtek's services, including the insurance agency.

8. Competitive Analysis

Major Competitors

Newtek Insurance Agency operates in a highly fragmented and competitive market.

• Traditional Large Insurance Brokers:

• Companies: Marsh McLennan, Aon, Gallagher, Willis Towers Watson.

• Competitive Positioning: These firms have vast resources, global reach, and deep industry expertise, but may not be as focused on the smaller end of the SMB market.

• National and Regional Insurance Agencies:

• Competitive Positioning: These agencies have strong local and regional presences and established relationships with a wide array of carriers.

• Insurtech Companies:

• Competitive Positioning: Digital-first providers that leverage technology to offer a streamlined, low-cost customer experience. They compete on ease of use and price.

• Direct-to-Consumer Insurance Carriers:

• Competitive Positioning: Large carriers that sell directly to businesses, competing on brand recognition and scale.

9. Market Analysis

Market Overview

The agency operates within the large and growing small and medium-sized enterprise (SME) insurance market.

• Market Size: The global SME insurance market was valued at USD 417.27 billion in 2025.

• Growth Potential: The market is projected to reach USD 821.6 billion by 2034, growing at a CAGR of 7.01%.

• Key Market Trends:

• Increasing digitalization of SMBs, creating demand for new types of coverage like cyber liability.

• Growing adoption of usage-based and customized insurance products.

• Shift towards digital platforms for purchasing and managing insurance policies.

• Market Opportunities: There is a rising demand for specialized coverage as small businesses become more aware of complex risks and regulatory requirements.

10. Strategic Partnerships

• Partner Organization: Freedom Bank of Virginia

• Nature of Partnership: Announced in December 2022, this collaboration allows Freedom Bank to offer Newtek Insurance Agency's full range of commercial and personal insurance solutions to its business and consumer clients.

• Strategic Benefits: This alliance significantly expands Newtek's distribution channel by tapping into Freedom Bank's established client base. It also provides Freedom Bank's customers with convenient access to a comprehensive suite of insurance products, enhancing the bank's value proposition.

11. Operational Insights

• Current Market Position: Newtek Insurance Agency is uniquely positioned as an integrated service provider within the NewtekOne ecosystem, differentiating itself from standalone agencies.

• Competitive Advantages:

• Integrated Ecosystem: The ability to seamlessly bundle insurance with lending, payment processing, and other business services is a major differentiator that fosters client loyalty and creates cross-selling efficiencies.

• Single-Source Provider Model: The "one-stop-shop" approach simplifies vendor management for small business owners.

• Advisory Model: The agency uses non-commissioned-based technicians who act as advisors, evaluating client needs to find the best solutions from over 50 providers, which helps build long-term, trust-based relationships.

• Operational Strengths: The use of the proprietary Newtek Advantage™ platform provides a unified and efficient digital experience for clients, streamlining service delivery and client management.

12. Future Outlook

Strategic Roadmap

The agency's future is closely aligned with NewtekOne's overarching strategy of leveraging technology to provide an integrated suite of essential services to independent business owners.

• Planned Initiatives:

• Further enhancements to the Newtek Advantage™ platform to create a more intuitive and seamless user experience.

• Development and marketing of tailored insurance solutions for emerging risks, particularly in cyber liability.

• Growth Strategies:

• Continue to expand strategic partnerships with financial institutions and other organizations serving the SMB market to broaden distribution.

• Deepen penetration into the personal lines market by targeting the employees of its commercial clients.

• Future Challenges: The agency faces the challenge of competing in a crowded market against both traditional brokers and nimble insurtech startups. Maintaining its value proposition will require continuous innovation in both technology and service delivery.