Sum of the Parts

The world of mergers and acquisitions is typically fraught with complexities. Even when a new entity strives to retain the best facets of two organizations, history shows a number of deals do not survive the first five years.

When RSA acquired GCAN Insurance Company — a Canadian mid-market, large risks and specialty commercial insurer — in January of 2011, we were conscious of the complexities involved in taking two very different insurance players in size and scope and bringing them together to become Canada’s third-largest general insurer and most specialized provider on a global scale.

Although GCAN presented a major opportunity for RSA, it wasn’t without risk. Both were property and casualty insurers, but other similarities were few and far between. The employee models, broker distribution models and product offerings were all quite different. Understandably, the acquisition was met with some skepticism in the property and casualty marketplace: how can different cultures with disparate propositions come together without diluting the value of both?

With a year’s experience now behind us, we can say that one of the biggest P&C purchases in the Canadian insurance industry — at the time, the transaction was the single-largest acquisition in over a decade — has succeeded in providing the best of the best for our clients, brokers and employees in regard to appetite, scope and scale. This is not to suggest that that there have not been challenges along the way. The following is a glimpse into how RSA has shaped the environment for our internal and external stakeholders over the past year, setting us on a path toward success and growth for 2012 and beyond.

Making Employee Needs a Priority  

Experts on post-merger management say successful M&A integrations are most often rooted in similar corporate cultures. From the outset, RSA was acutely aware of the different cultures to be integrated following this transaction. Each company’s prior experiences varied markedly. On the one hand, RSA is a large global public company; on the other, GCAN is a small, specialized risk firm.

RSA invested a lot of time and effort in preparing how to address the needs of its new GCAN employees, while at the same time remaining focused on RSA employees also affected by this change. Having dedicated a lot of thought to post-acquisition human resources management, including consideration of benefits, compensation, systems and its broker distribution platform, RSA felt confident it could successfully meet the expectations of GCAN employees and concurrently deal with any RSA employee concerns.

RSA’s international network allows GCAN employees new opportunities on a global scale to which they would not previously have had access. It was therefore disappointed when some people chose to leave the organization in spite of this enhanced employee offering. A key lesson learned from this experience is that even if an organization directs a lot of energy and attention towards the smooth transition of employees, when employees come from different cultures, a few may still decide it is not the right fit for them.  

As it turned out, several of the departed employees returned to RSA within a few months. Now they are some of the proudest ambassadors of the newly formed proposition.

Cultivating the Broker Relationship

As previously noted, the broker community approached the acquisition with some skepticism and even apprehension.  In our discussions with brokers, some expressed concern that RSA, given its size and scope, could take a conservative approach to underwriting writing and thus detract from the very essence of GCAN — that is, the quick delivery of high-quality, highly specialized solutions for complex risk. Consequently, we worked very hard at moving the dial from skepticism to openness with our broker partners, who are now starting to see tangible gains as a result of our post-acquisition strategy.  

With the addition of GCAN’s risk expertise, RSA can now offer its broker partners a broader range of options for clients under one roof. Brokers now understand that RSA’s capacity has strengthened in the last year. Key international clients in a variety of sectors — construction, renewable energy or manufacturing and distribution, to name a few — can now receive a complete product offering with access to a global network through a single source.

RSA will expand on these results in 2012. With GCAN now integrated, RSA will continue to have local authority and expertise and write for challenging risks. In addition, its appetite, ability and global reach continue to grow.

RSA has also launched Electus, a new recognition program for brokers. Electus (Latin for chosen) is a program RSA created post-acquisition to recognize its top-performing brokers across Canada. Electus is unique in the Canadian marketplace: it combines the strongest aspects of RSA and GCAN’s original recognition programs. Electus brokers receive distinctive services and benefits. They act as advisors, participate in product launches tailored to their clients and receive customized training programs and HR support.

Playing on a Global Scale

RSA has a global reach, with a presence in 140 countries.  This global capacity is of high value to our broker partners and clients, but is equally important for our underwriting team. The specialized risk market can now be served globally. One year into the acquisition, this advantage is showing real results.

RSA’s newly joined underwriters from GCAN now have access to global training and resources. They are frequently shuttling off to courses in the United Kingdom or elsewhere. They lead on accounts they could not have accessed previously and write bigger volumes of business because of RSA’s reach. They are now able to apply their expertise in markets outside of Canada.

A year into the acquisition, RSA is already seeing a measurable difference. It has a competitive advantage in that it is one of the few Canadian providers of solutions in global risk. With a mature marketplace here in Canada, global risk presents a huge opportunity and one in which RSA is determined to play a leadership role.

As with every merger and acquisition, there is still more learning to do, but as an organization we believe we have found a strategic fit with GCAN. For RSA, a key lesson is that with proper planning and attentiveness to stakeholders, even very different parts can come together to make a greater whole.