Canadian Underwriter
News

Why Intact has no intention of selling BrokerLink


August 4, 2021   by Greg Meckbach


Print this page Share

If you knock on Intact’s door offering money to buy its BrokerLink subsidiary, prepare to get rejected.

“You are far more likely to see us putting way more capital in [the property and casualty insurance brokerage] space than the other way around,” said Charles Brindamour, CEO of Intact Financial Corp., during a virtual fireside chat with CIBC Analyst, Paul Holden.

During the CIBC chat, an audience member asked how much more Intact could grow its brokerage business and whether Intact would ever consider spinning off the BrokerLink Inc. subsidiary.

Intact has “no intention” of spinning off BrokerLink, Brindamour replied.

BrokerLink, which has more than 150 branches and 2,000 employees, is owned by Intact, Canada’s largest property and casualty insurance carrier. BrokerLink closed the acquisition of five new brokerages this past December and a sixth in February, 2021.

“It is about building a distributor that is as big as the direct writers, so as to compete and grow like the direct writers,” Brindamour said July 29 of BrokerLink during the CIBC virtual fireside chat. That event was held two days after Intact released its financial results for the three months ending June 30.

BrokerLink now writes more than $2.3 billion a year in premiums, Brimdamour said July 28. This is a 25% increase over BrokerLink’s premiums in 2019, Brimdamour said during a conference call discussing the Intact Financial’s Q2 results with investment banking analysts.

“With a robust [merger and acquisition] pipeline we think [BrokerLink president] Joe D’Annunzio and team can double that business over the next five years,” said Brindamour.

In recent years, Intact has also acquired managing general agents such as International Bond & Marine Brokerage Ltd. of Hoboken, N.J. and Frank Cowan Company of Cambridge, Ont.

“To support our growth in specialty lines, there is a big distribution opportunity. We started to add MGAs with expertise. That is strategically consistent with our intentions in specialty lines. You enter into a line where you earn distribution profit while you learn about the risks,” Brindamour said during the CIBC virtual chat. “I think this is a really good strategy in specialty lines and I think it is a good strategy in the U.S. market in particular. How big can this get? I am not 100% sure because you have to be far more selective [than in buying a retail brokerage] in terms of the expertise you are acquiring.”

Intact expanded into United States commercial specialty in 2017 with its acquisition of OneBeacon, which has since been re-branded as Intact.

By contrast, the strategy with BrokerLink in Canada is “a whole different strategy” because it is about competing with the directs, suggested Brindamour.

“Remember, 10 years ago, that competency didn’t exist,” meaning Intact did not operate a brokerage.

Brindamour explained the thinking behind the decision to get into the brokerage business.

“We said ‘we are good at a number of things. Let’s build a new competency and see if it works.’ It turns out that years later, it does work.”

BrokerLink announced in February 2021 that in December, it acquired J. G. Rivet Brokers, John F. Smith Insurance Brokers, All City Insurance Ltd., Air-Alta Insurance (Airdrie) Ltd. and Centre Street Insurance Inc. In February 2021 BrokerLink acquired Gougeon Insurance Brokers.

Feature image via iStock.com/metamorworks


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*