Canadian Underwriter

Intact’s rationale for buying this bond and marine brokerage

September 16, 2020   by Greg Meckbach

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Intact Financial Corp.’s latest “tuck-in” brokerage acquisition is part of its ongoing expansion effort in the United States, chief financial officer Louis Marcotte suggested Tuesday.

International Bond & Marine Brokerage Ltd. of Hoboken, N.J., announced Sept. 11 it is now part of OneBeacon Insurance Group Holdings Ltd., which Toronto-based Intact acquired in 2017.

“It just expands our expertise into another sector in the specialty area in the U.S.,” Marcotte said during a virtual fireside chat with Barclays analyst John Aiken. “There is more to come in the tuck-in area as we try to expand our business in the U.S.”

International Bond & Marine places several lines of commercial insurance, including marine and freight legal liability, among others. It also provides several categories of bond products; among them, ocean transportation, customs and specialty (including performance and airport security).

“It is a nice addition to our surety business,” Marcotte said of International Bond & Marine. “It is one area of the market that we did not have access to,” Marcotte said Tuesday during the Barclays Global Financial Services Virtual Conference.

During the fireside chat, Aiken asked Marcotte what effect the ongoing pandemic could have on mergers and acquisitions among Canadian insurers.

“We still think 15 points of market share will change hands,” said Marcotte, reiterating a prediction made earlier by Intact officials.

“A good 15-20 points of market share will change hands,” CEO Charles Brindamour said in 2019 during a conference call discussing Intact’s financial results for the second quarter of that year. “In an environment where the average return of the industry is just not cutting it in terms of return, many people are thinking about the way forward.”

The merger this year of Quebec mutual insurers La Capitale and SSQ Insurance “just proves our thesis,” Marcott said Tuesday during the Barclays conference.

“More than a third of Canadian insurers are foreign-owned, so we are watching what is going on in their respective markets, and there are different drivers,” said Marcotte.

“For all sorts of reasons, we think some of the Canadian assets will come up for sale. We are clearly ready, and that remains a priority for us, for the future of our organization, to capture one of those in Canada.”

In the meantime, Intact is focuussing on brokerage acquisitions. “BrokerLink is very active right now acquiring brokers,” said Marcotte.

Among the Canadian firms recently acquired by Intact are The Guarantee Company of North America and On Side Restoration.

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