Industrial Alliance Insurance and Financial Services and PPI Management Inc. (PPI), announced Feb. 26 that they have reached an agreement for iA Financial Group to acquire PPI. The transaction is effective immediately.

PPI is one of the largest managing general agencies supporting independent advisors in Canada. PPI operates 15 marketing and resource offices across Canada and has a national distribution network of over 3,000 advisors.

Leader in brokerage distribution

“With the acquisition of PPI, iA Financial Group becomes the leader in insurance brokerage distribution in Canada,” commented Denis Ricard, Chief Operating Officer of iA Financial Group. “Combined with the Hollis Wealth network acquired last year, iA Financial Group is now positioned at the top of independent distribution for financial services in Canada, providing advisors with best-of-class services for both insurance and wealth management all under one roof. In addition, the PPI Advisory division that focuses on ultra high-net-worth clients brings a significant enhancement to iA Financial Group wealth advisors.”

Committed to independence

“On behalf of iA Financial Group, we extend a warm welcome to PPI advisors and staff,” added Ricard. “We will continue to work together to develop innovative and customized insurance products and concepts, and we remain fully committed to preserving the independence of PPI as a marketing organization representing and promoting the products of all major Canadian insurers. This acquisition is yet another demonstration of our organization’s firm belief in the value of distribution through advisors.”

Interviewed by The Insurance and Investment Journal, Jim Burton, Executive Chairman and CEO of PPI, said PPI began the search process for a buyer early in 2017 with private equity firms and began discussions with some last summer. However, after 40 years of building PPI, Burton says he and the other PPI leaders decided it was important to choose a home that was more in line with the firm’s values. This led them away from investment firms and they began discussions with insurers last fall. 

Product vision

They chose iA Financial Group for various reasons. Access to capital was a part of it, but so was product vision. Commitment to independence was another factor. “We had already had a good experience with them in designing and distributing product (its product Equibuild) and iA was very clear they were looking for a completely independent entity.”

PPI’s leadership team, including Burton, Jim Virtue and John McKay will remain intact. All employees will also remain, said Burton.

However, iA has has authority over PPI’s board. Jim Burton is a member of this board along with iA executives. 

In addition to understanding the importance of independence, iA also “understood the importance of relationships with other insurance companies,” said Burton, noting that PPI is a leading distributor with all insurers. 

A long-term home

“On a personal note, PPI is my baby. I started the company 40 years ago,” he said underlining that this makes it very important to him that there be stability for the people who work with the firm. “Advisors and employees know they have a long-term home that will still be there when the PPI leaders leave someday,” he said.

He added that PPI’s advisors have reacted quickly and positively to the news.

“We are passionately for the rights of the independent advisor. The basic premise is threefold: Insurance can be used as an effective vehicle for more sophisticated markets; independent life insurance advisors are key to distribution and PPI has a role to play in them differentiating themselves.” These premises will continue to be followed, he says.

Business as usual

What would he say to those who are concerned about the sale of PPI to an insurer and its independence? Burton says the test will be going forward. They will see it is business as usual, that they still have the same access to insurers, services, etc.

To help finance the transaction, iA Financial Group has entered an agreement through which a syndicate of underwriters co-led by TD Securities Inc. and National Bank Financial Inc., will purchase 2,500,000 common shares from iA Financial Group at a price of $54.10 per common share representing aggregate gross proceeds of $135 million. iA Financial Group has also granted the common share underwriters an over-allotment option, exercisable in whole or in part for a period of 30 days from the closing date of the common share offering, to purchase up to an additional 250,000 common shares at a price of $54.10 per share for additional aggregate gross proceeds of up to $149 million.