Private equity firm acquires digital brokerage

Private equity firm Southampton Financial Inc. has announced its acquisition of Ontario-based digital insurance brokerage aha insurance.

Launched in 2017, Waterloo, Ont.-based aha insurance offers consumers the ability to quote, purchase and manage car and home insurance policies entirely online. The brokerage serves customers in Ontario, Alberta and British Columbia, also offering business, trailer, pet and life insurance, among other products, according to its website.

“The transaction with Southampton marks a significant milestone for our young company as we will tap into a much larger platform with significant resources and talent to bring a broader range of products and services, all with the goal of greatly accelerating our growth strategy,” aha insurance CEO Steve Livingstone said in a press release.

KPMG Corporate Finance Inc. and Stikeman Elliot LLP acted as M&A advisors to the shareholders of aha insurance while Dentons acted as legal advisor to Southampton.

Southampton is a private equity firm in Toronto focused on the Canadian property and casualty insurance distribution space. It provides oversight, strategic guidance, access to capital, new markets and various support services (including a leading-edge IT platform). The PE firm partners with entrepreneurs who own insurance brokerages and MGAs.

Southampton is building an “integrated platform” to include brokerages and MGAs, the company states on its website. “The intent is to leverage the competencies and resources of each operating subsidiary. Each subsidiary will be allowed to operate independently and will be given access to a variety of resources from Southampton, including a common IT platform, access to capital for growth, access to new insurer markets, and cross-selling referrals.”

Southampton intends to operate as a national insurance intermediary platform in all provinces in Canada. “French language capabilities will be added to the platform once a suitable insurance broker partner has been identified in Quebec,” the PE firm said on its website.

Along with aha insurance, Alteri Insurance is another of Southampton’s “platform companies.” Vancouver-based Alteri Insurance provides home, auto, travel, commercial, life and health insurance to clients throughout B.C. and Alberta.

PE interest in Canadian P&C brokerages is showing no sign of slowing down, attendees of KPMG’s 2023 Insurance Conference in Toronto heard in November.

Private equity groups remain eager to acquire Canadian brokerages, said Andrew Mathias, senior vice president of corporate finance of KPMG in Canada.

“There’s these gems that are out there, whether it’s in B.C., or it’s in Alberta or Ontario, there’s a ton of opportunity,” Mathias said during a breakout session called Navigating through the current M&A dynamics. “We’re expecting this [private equity interest] to continue. 

“And more importantly, it’s not just the U.S. and Canadian private equity, it’s now going to be U.K., European private equity groups that are coming to Canada.”

Feature image by iStock.com/amgun