Canadian Underwriter

Modern Master

July 18, 2013   by Terri Goveia

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Brad Shantz made the list even before the deal was done. It was 2010, and he and business partner Alex Meier had just led an investor group bid for Vancouver brokerage Shaw Sabey & Associates Ltd. Before the closing, he wrote down the names of people he wanted to join him there.

Among the chosen: respected marketing and human resources managers, “the best producer in Canada” and a rainmaking technical sales guy. It was “a hunting list,” he says, a vital part of his long-term plan. Since then, everyone on it has joined Shantz, now Shaw Sabey’s CEO. “We went out and got the people. As soon as you do that, you get momentum.”

Almost three years later, that momentum is carrying Shantz and the brokerage into the future. The dream team’s momentum has helped Shantz realize his broader vision: turning a nearly century-old business into an example of sleek 21st century efficiency.

Enter the Entrepreneur

The acquisition marked a new phase for Shaw Sabey, and for Shantz himself. He started his career at Reed Stenhouse and by 2009 he’d held various executive roles at Aon and Benfield Group. With expertise in risk management, broking and reinsurance, he was a little restless. While he relished each new role, “it can be difficult to work in [larger] environments if you have an entrepreneurial flair,” he says.

But the Shaw Sabey purchase offered complex challenges for even the most adventurous spirit. A string of acquisitions under the previous owner had created a sizable business, but there was still work to be done.

“Larry [McDonald] was a fantastic consolidator,” he says. “He had completed a whole bunch of different acquisitions, which he’d amalgamated into Shaw.” The challenge for Shantz and Meier, Shaw Sabey’s president: harmonizing business cultures. Each of Shaw’s previous acquisitions had a different way of doing things, “right down to the way they issued certificates,” he says.

Aging systems compounded the confusion. The entire company was operating on Windows 2000, and putting documents together by hand.

At the same time, Shantz was mindful of market demands. Ongoing insurer consolidation meant that scale and premium volume was more critical than ever. “That means that you have to manage your company relationships better and you have to grow your business.” 

Those challenges demanded a focused plan. Shantz spent the first three months post-acquisition observing the business and honing a three-pronged strategy. He and Meier made organization and standardization their first priority, turning to information technology (IT) solutions. “There hadn’t been any investment in technology in at least a decade,” he says. “That was an area we needed to start with a clean slate.”

If we acquire quality businesses with goodwill in their communities, we’re going to leave those names alone.”

That began with Shaw Sabey’s sizable program and association business, which covers groups ranging from Arts BC to the Independent Contractors & Business Association. Shantz put much  of it on a common point-of-sale (POS) system, making it possible for staffers to quote, issue policies and assemble documents in one transaction. “That’s where we’re trying to go with all of our program and package business.”

Next, he and Shaw’s marketing manager, Nadene Beemish, created a Small Business department for organizations with premiums under $10,000. That went onto a dedicated IT platform, as did large commercial business. “That really facilitates the management of those files and processes that business in an economical way.”

To support the changes, the Shaw Sabey team opted to outsource its IT services. Although staffers use The Agency Manager (TAM) for customer data and accounting, they turned to point-of-sale software Virtual MGA for personal-lines rating and document issuing. And there’s room to grow. “As the business evolves, more business will sit on that system.”

Technology was a crucial element of Shaw’s transformation. “It’s [not just] about managing your information, it’s about how consumers want to interact with you,” Shantz points out. By putting brokerage systems on platforms that both brokers and customers can access on their own schedules, “that improves our ability to service them.”

Corporate Services Core

Systems may have helped streamline processes, but another “dream team” was essential to further transformation. By setting up a centralized Corporate Services Group within Vertical Insurance Group, the entity that owns Shaw, Shantz and Meier could create clear plans for administration, accounting, human resources, and strategy for all the Shaw offices and related businesses. “That team works to help bring the business forward and maximize the benefits of having more companies.”

The group—made up of experts in HR, finance, and IT —forms Shaw Sabey’s operational backbone. It helps streamline key business operations, everything from employee handbooks, policies and scorecards to updates on industry regulations. “We can only do all of those things because we have a corporate services group supporting them,” Shantz says.

Although the group has been essential to ongoing progress, he acknowledges that scale—stemming from sister organizations Plus Underwriting Managers  and Avro Insurance Managers, where he is also CEO —made it possible. “If we were trying to hang that off the back of Shaw [alone], we probably couldn’t do it.”

Bargaining Power

But they can, and the group has the added advantage of feeding into Shaw’s growth strategy, according to Shantz. Its experts are vital to due diligence in the early stages of an acquisition and later, with integration.

Those growth targets are as focused as his employee wish list. “For someone in the mid-market broker space, we have a really good sense of where we want to go. We want to have good distribution, but we also want to be specialists in certain product lines.”

Along with program business, the brokerage has carved out a sizable niche in professional liability and in construction. Shantz’s investor group recently added professional liability specialist Metrix Professional Insurance Brokers to its roster, giving Shaw added heft in that line of business.

“That was a fantastic acquisition for us,” he says. Not only did it dovetail with existing business, but boosted the volume the group had with insurance companies. “That increases our relationship with them and our bargaining power.”

Shantz credits Meier for his keen acquisition and strategic instincts. They are both continually on the lookout for new corporate development opportunities. Broker-owners who need a succession plan are among their targets. “We’re happy to buy into a business and help with a plan,” he says. “This lets us consider the deals that the alphabets won’t do.”

But they aren’t interested in building a mega brand. Metrix will continue to operate under its name, as will any future purchases. “If we acquire quality businesses with goodwill in their communities, we’re going to leave those names alone,” Shantz says.

Still, both Shantz and Meier have added to Shaw Sabey’s reputation, making them a valuable broker partner, according to Ken Carlstrom, senior vice president, corporate risk at Trisura Guarantee Insurance Company.

On the company side, we get into brokerages, and you get a sense of whether things are optimistic or kind of sleepy. There’s a strong positive energy in that office and you can see they are all buying into the plan that Brad has set out.”

Both businesses have similar niches in professional liability and construction and surety, but the brokerage’s leadership also distinguishes them from the pack in a competitive market, Carlstrom notes. “Since Brad and Alex got involved [with Shaw Sabey] they’ve brought cohesive direction to the organization.”

The refocused expertise at Shaw Sabey also serves the brokerage well. “A lot of people are fighting for a limited amount of business,” he points out. Since many brokers have access to the same markets and can present many options—and great pricing—to clients, “differentiating yourself is very important.”

“They stand out whether it’s in their construction practice or in professional liability. When they’re talking to clients, that expertise comes through. [Clients] feel they can trust them and the solution they’re offering.”

The Metrix deal is further testament to their mettle. “There were a lot of people courting Metrix. I think Brad and Alex were able to articulate their vision [for the business and how] it would line up with their values and goals.”

However, in Carlstrom’s opinion, Shaw Sabey 2.0’s most defining element is its energy. “On the company side, we get into brokerages, and you get a sense of whether things are optimistic or kind of sleepy,” he says. “There’s a strong positive energy in that office and you can see they are all buying into the plan that Brad has set out.”

The Personnel Pay-off

To date, Shantz has realized a large part of his vision. “When we bought Shaw it was a fairly static business,” he says. “The five-year income was flat to declining. We’ve changed that to an upward curve.”

He estimates that revenue has grown by 10% per year since he and Meier took over. His staff has grown too, even outpacing business gains. Since some of the original employees were on the verge of retirement, his team has worked to implement succession plans, and the brokerage is in the midst of transferring skill and knowledge.

Although he stresses continuing education for employees, Shantz also encourages them to strike a balance. One quadrant of the in-house employee scorecard is for personal achievements. For example, one employee plans to run a major marathon, a goal that the brokerage will help her achieve with time off to go to Chicago or Boston, he says.

In Shantz’s view, well-rounded employees are more motivated, fuelling an energetic environment. The brokerage’s new, modern offices in Vancouver’s Bentall Centre “have a good vibe,” he says. “People are laughing. It’s a busy, active place.”

His growing “dream team” is just as essential to Shaw’s future growth as IT or organizational shifts.

Key to that strategy: an employee ownership plan. Many of the employees Shantz had targeted have come on as equity partners, he says. It also ties into the acquisition strategy, in that it helps keep the sellers and existing employees post-purchase.

Among the high points of the brokerage’s transformation: the moment he realized that industry professionals were clamouring to get in the door. “This will continue to be a people business. IT is just a facilitator. Having high quality people is going to be the differentiator.”

Norman Wong can attest to that. The chief financial officer at ResponseTek Networks Corp., can gauge good customer service better than most: his firm specializes in “customer experience management” software that assesses customer service for global telecom firms, banks and retailers. “The customer experience really matters, whether it’s a representative on a team or someone in the back. They’ve been responsive, and are willing to walk us through issues [where] a lot of brokers would just send a quote.”

At first, he was concerned about switching to a smaller brokerage. With his firm expanding in Europe, the Middle East and Asia-Pacific, their insurance needs were literally all over the map. But the Shaw team—Shaw Sabey is a partner in Assurex Global—has helped them handle the insurance negotiations. When Australian regulators told him he’d need $20 million in coverage for ResponseTek operations there, “they were able to advise and prepare us so we could [show] that we didn’t need [so much.]” 

Even as sector pressures bear down on all brokerages–Shantz is especially mindful of privacy and cyber liability issues, along with rising earthquake deductibles in British Columbia–Shaw Sabey’s onward march is far from over. Shantz and his partners are eyeing new horizons in Alberta, Saskatchewan and “outside the GTA” in Ontario. 

The Shaw transformation blueprint isn’t the only thing he has to work with, according to Carlstrom. “He has a keen awareness of not just how to run an insurance brokerage, but how to run a company from the financial side and the operations side,” he says. “He’s gone out and gathered this wealth of knowledge and that’s serving him really well.”


Copyright 2013 Rogers Publishing Ltd. This article first appeared in the June 2013 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.