BrokerLink still sees plenty of M&A opportunities in provinces where it currently operates and doesn’t have any immediate plans to expand into new geographic areas, the brokerage’s president told Canadian Underwriter in an interview Tuesday.
BrokerLink is focusing its resources on areas in which it has scale — Alberta, Ontario, and the Atlantic Canada provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador, president Joe D’Annunzio said.
“We have scale there, we have offices there, it’s not new to us,” D’Annunzio said. “There are still quite a few opportunities, and so that keeps us busy.”
That said, when it comes to entering new provinces, “never say never,” D’Annunzio added. If the right opportunity came along, if the values match and BrokerLink gains scale and talent, “we would absolutely look at it.”
But thus far, BrokerLink has been “busy with the opportunities in the [provinces] we’re already in,” he said. “It just makes no sense to divert your resources to something brand new just yet. Either that or the right one hasn’t come across our desk yet, and that will happen eventually.”
Although some within the industry may perceive BrokerLink as primarily a personal lines broker, D’Annunzio said the brokerage has been quietly building up a “powerhouse” in commercial lines over the last four years. “We’re approaching a billion dollars in direct written premium in commercial lines, which makes us a Top 7 to 10 broker in commercial lines. And we’ve done that quietly, but it’s huge for us.”
Within commercial lines, BrokerLink has presence in the specialty lines space.
“Whether it’s trucking, construction, or D&O and E&O, when you’re close to a billion dollars in commercial lines, you play in a lot of different areas of that space,” D’Annunzio said. “We continue to look for quality brokers that might specialize in certain areas of commercial lines.”
BrokerLink doesn’t focus on life insurance or group benefits per se, but is building those books through acquisitions of P&C brokerages.
“Now, [brokerages] are looking at travel insurance to life insurance for their personal lines’ customers,” D’Annunzio said. “And so, you want to be a broker that can round out all the accounts for a customer…
“I think as we get bigger and we get different types of consumers, and a diversity of consumers, we’ll have to make sure that our game is A-plus in all those other areas as well.”
In addition to discussing BrokerLink’s M&A strategy, D’Annunzio also looked at opportunities and challenges facing the industry, such as talent, the current uncertain economic environment, and technology challenges when integrating brokers. “But we’ve become an expert,” he said of technology integrations.
To address the talent crunch, BrokerLink has established a trainee program that recruits students from schools such as Humber College’s insurance program (and others) and trains them, along with a learning and development department. “When we buy a brokerage, it’s not just about planting a flag in a new town or buying premium, but it’s acquiring really good talent,” D’Annunzio said.
“If you’re in a small town, or if you’re not a broker who has access to some of these programs, the fight for talent is really tough out there,” D’Annunzio said. It may even be difficult to offer a hybrid work model; for example, in a small brokerage with four or five employees, brokers may be required to come into the office every day.
BrokerLink offers a hybrid work model so employees do come into the office — something that is important for mentorship and building a culture. “For us, it all starts with culture and values,” D’Annunzio said. “We don’t do a deal if our values and the culture doesn’t match. That’s probably the only non-negotiable when we look at a broker.
There are valid reasons why brokers are looking to get out of the business, he noted. And although money and price are important considerations, “a lot of brokers want to make sure you take care of their employees,” D’Annunzio said. “They’ve spent years and years with these folks and they want to make sure that they’re taken care of.”
Overall, D’Annunzio said the first quarter “was a bit muted” from an M&A perspective compared to last year, but it has picked up in Q2.
“I think it’ll be a real good year, at least for BrokerLink,” he said. “When we end the year and say, ‘Did we acquire as many as last year? Did we have good, strong performance?’ I’d like to think that we’re building to a very good year for us as well.”
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