Industry reacts to Financial Horizons’ acquisition of Excelpar Alain Thériault | April 17 2012 04:00PM
The transaction set off a wave of surprise among many industry players in the Quebec market contacted by The Insurance and Investment Journal.
"This is a transaction that we like,” said Guy Couture, vice president, eastern Canada at Manulife Financial. I hope, however, that Excel will retain its identity since it was a high quality managing general agent here in Quebec. It is also reassuring that this consolidation has occurred between two distributors rather than between an insurer and a distributor."
Michael Kirouac, vice president and general manager of MGA Groupe Cloutier, said he believes the deal will have little impact on the daily lives of financial advisors in Quebec. The competition will be the same, it is a question of another managing general agent, he said. "However, Excel has just sold to a distributor in Ontario, whose shareholders are American. We would have liked this to have been done inside Quebec. We are losing an important player. Together, we would have enhanced our presence in Quebec."
The transaction is part of the normal process of consolidation of the MGA network, said Mr. Kirouac. "Everyone is talking about acquisitions right now. Jokingly, all of the managing general agents are sending messages to each other, asking if they are for sale." Just during the week he was interviewed, he says that two insurers asked him this question.
An executive at one insurance company, who did not want to be named, said that consolidation in the MGA market could be of concern in the long run if it opens the door to an environment that is controlled by five or six large managing general agents. "I do not think this is the case for now, but there people at insurance companies forecasting this, imagining this kind of situation, and they are are worried about it."
Senior vice president of distribution at Transamerica Life, Ray Mackenzie, welcomes this transaction because it unites two firms that are active, like the insurer, in the middle class market. He is not worried about the effect of consolidation. "There will always be room for smaller managing general agents who choose to specialize in a niche. Others who want to grow will have to choose between partnerships and mergers."
SSQ Financial Group also responded that it was pleased to see this transaction. SSQ and AXA Life (recently acquired by SSQ) are both suppliers to Excel.