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Insurance brokerage Hub bulking up Canadian benefits business with acquisition spree

The biggest insurance brokerage in Canada has been on a dealmaking blitz that may only be about halfway done, according to the company’s Ontario chairman.

Chicago-based Hub International Ltd. sells insurance, but it has also spent the past year expanding the Canadian side of its business, which advises companies on their employee benefits, such as health or retirement plans. It has been doing so in part by acquiring a number of boutique firms.

On Tuesday, Hub said it acquired for an undisclosed sum Toronto’s PDF Financial Group Inc., an independent brokerage that helps a company’s human-resources department manage employee programs. The acquisition was one of five such deals Hub has announced to date in October, involving three companies in Canada and two in the United States.

Hub is Canada’s biggest property and casualty insurance broker by a “healthy margin,” but it had heard back from some clients wanting advice about benefits and pensions as well, according to Gregory Belton, the executive chairman of Hub Ontario.

“We’re not only getting larger and filling out a geographic footprint, but we’re developing services for what we think is the under-served middle market of Canadian business,” Belton said in an interview with the Financial Post.

After announcing its Canadian benefit strategy in July 2018, Hub noted at the beginning of this year that it had already acquired 13 Canadian employee-benefit and pension brokerages since 2018, increased fee revenue to more than $50 million and opened seven new offices. Hub wants to earn more than $100 million in commission fees by 2021, and said it expected to open an additional 10 offices.

“I would say that we’re about halfway done in our acquisition strategy,” Belton said. “We have a fairly robust pipeline across the country, and you’ll see further acquisitions being closed in the coming months.”

Mike Berris, a partner at accounting firm Smythe LLP who specializes in valuations and M&A consulting in the Canadian P&C insurance industry, said he expects more activity in the benefits space — although not all brokers may be able to pull it off.

Even though it’s a risk-based product, you really have to have scale and expertise to do it properly.

Mike Berris, partner, Smythe LLP

“There’s a lot of desire, but there’s only so many people who are capable of doing that,” Berris said. “Even though it’s a risk-based product, you really have to have scale and expertise to do it properly.”

Hub has been scaling up since it formed in 1998 with the merger of 11 Canadian brokerages. It went public soon after, expanded into the U.S. and in 2007 was bought by private-equity firm Apax Partners and investment bank Morgan Stanley.

In 2013 Hub announced it was being acquired by funds advised by another private-equity firm, Hellman & Friedman LLC, in a deal that valued the brokerage at around US$4.4 billion.

Hub then said in October 2018 that it had agreed to a deal involving “a substantial minority investment” from funds managed by Toronto-based investment firm Altas Partners. The agreement implied a total enterprise value for Hub of more than $10 billion.

Since the deal, Hub’s website shows it has made more than 50 acquisition-related announcements. Currently, the brokerage has more than 11,000 employees, with more than 250 offices in the U.S. and about 200 in Canada, a spokesperson said.

“Like a lot of private-equity-owned brokerages, they have been very, very aggressive and they’re very, very effective in growing through acquisitions,” Berris said.

Belton said most Canadian businesses fit the mid-market mold, but that there is no “dominant player” in that section of the market right now for the sort of benefits business Hub is expanding. Even so, he said there has been “very robust competition” for the types of companies Hub is buying.

“Our aspiration is to become the dominant player, just as we are in the property-casualty side of the business,” Belton said.

Hub International Acquires Ontario-based PDF Financial Group Inc.

Chicago, October 8, 2019Hub International Limited (Hub), a leading global insurance brokerage, announced today that it has acquired PDF Financial Group Inc. (PDF). Terms of the transaction were not disclosed.

Based in Toronto, Ontario, Canada, PDF is an independent brokerage offering consulting and outsourcing services for employee benefit programs, human resources, and related financial advice. Peter Demangos, Founder and President of PDF, will join Hub International Ontario Limited (Hub Ontario).

The move continues to reinforce Hub’s ongoing Canadian employee benefits growth and services strategy to expand its best-in-class employee benefits and retirement solution, addressing the challenges clients are facing, including in benefits communication, health and wellness, and retirement.

About Hub’s M&A Activities
Hub International Limited is committed to growing organically and through acquisitions to expand its geographic footprint and strengthen industry and product expertise. For more information on the Hub M&A experience, visit WeAreHub.com.

About Hub International
Headquartered in Chicago, Illinois, Hub International Limited is a leading full-service global insurance broker providing property and casualty, life and health, employee benefits, investment and risk management products and services. With more than 11,000 employees in offices located throughout North America, Hub’s vast network of specialists provides peace of mind on what matters most by protecting clients through unrelenting advocacy and tailored insurance solutions. For more information, please visit www.hubinternational.com.

Slice and SOMPO Announce ICS Proof-of-Value Contract Bringing On-Demand Insurance to Asia

Slice ICS platform now used by top insurers in the U.S., Canada, UK, and Asia Pacific

NEW YORK – August 14, 2019 – (BUSINESS WIRE) — Slice Labs Inc., the first on-demand insurance cloud platform provider, announced today that it has entered into a proof-of-value contract with Sompo Holdings Asia (SOMPO), regionally headquartered in Singapore and part of Sompo Holdings, a top Japanese insurer.

This new partnership brings on-demand insurance to the fast growing Asia Pacific region of Asia, the first of its kind. SOMPO will license the Slice Insurance Cloud Services (ICS) platform to quickly deploy and test new digital insurance products. Compared to other, more traditional solutions, the Slice ICS platform allows insurers, like SOMPO, to leverage the flexibility, scalability, and security of ICS through a high-value subscription model.

There are a number of new risks in mobility, travel, and leisure on-demand economy segments that are impacted by emerging technologies. Large social platforms also represent new opportunities for digital on-demand insurance products to be embedded in the overall experience. The companies plan to roll out various on-demand products across Asia throughout their partnership. Slice will be opening an office in Singapore to support this and other initiatives in the region.

“The future of satisfying insurance customers in any country and product segment hinges upon the cooperation of insurers and insurtechs,” said Tim Attia, CEO of Slice. “SOMPO is a strong example of how this can work as they have helped our cloud technology quickly scale into another global region and ICS is helping them reimagine insurance customer experiences.”

About Sompo Holdings (Asia)

Based in Singapore, Sompo Holdings (Asia) Pte. Ltd. is the holding company for its Asia Pacific entities, except Japan and is part of Sompo Japan Nipponkoa Insurance Inc, which is a member of the SOMPO Holdings headquartered in Tokyo, Japan. With a trusted presence in Asia since 1942, our business spreads with over 4,000 employees across the region. We are now the Top 10 Largest Non-Life Insurance Companies in Indonesia and Malaysia, and we have forged strategic partnerships to access a wider network of resources and distribution.

Learn more about the Group by visiting www.sompo-asia.com

About Slice:

Slice Labs is the insurance engine behind tomorrow’s cloud-based, on-demand digital services ecosystems for the new economy. Through Slice’s Insurance Cloud Services (ICS) platform, Slice is enabling insurers, technology companies, and other service providers to build truly intelligent and intuitive, pay-as-you-go digital insurance products protecting the insured anytime and anywhere.

President and CEO of ICBC moving on to lead Central 1

ICBC’s Board of Directors is announced December 7, 2017 that president and CEO, Mark Blucher, is leaving ICBC effective December 29, 2017, to become the president and CEO of Central 1 Credit Union.

Mr. Blucher has been with ICBC since 2010 when he joined as the senior vice president of insurance. He was appointed president and CEO in 2012.

Prior to ICBC, Blucher worked extensively in insurance and financial services including a number of senior executive positions in New Zealand and Australia.

“ICBC’s loss is Central 1’s gain,” said ICBC Board Chair, Joy MacPhail. “We will miss Mark’s extensive expertise and leadership but this is a great career opportunity for him. I am particularly pleased he has decided to stay in the province and continue to contribute his expertise here in British Columbia.”

“ICBC’s Board and senior management are fully committed to working with government to make both basic rates affordable and ICBC sustainable in the long run,” said MacPhail. “Mark has been a consistent champion of ICBC, customer service and rate affordability, and we will continue to pursue those principles.”

An interim CEO will be appointed shortly and ICBC’s Board of Directors will launch an external search for a permanent replacement.

Insurers: We’re off the hook, Duke Energy knew coal ash risk

Dozens of insurance companies say they’re not obligated to help pay for Duke Energy Corp.’s multi-billion dollar coal ash cleanup. They say the nation’s largest electric company long knew about but did nothing to reduce the threat of potentially toxic pollutants.

The claim is in a filing by lawyers for nearly 30 international and domestic insurance companies Duke Energy sued in March. The Charlotte-based company wants to force insurance payments to cover part of the utility’s coal ash cleanup in the Carolinas.

The insurers say they’re not paying because Duke Energy stored its coal ash in unlined pits as part of its normal business practices. Insurance company lawyers say no distinct pollution events triggered coverage.

Coal ash contains arsenic, mercury and other elements that may be hazardous in sufficient concentrations.

 

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