AGA Benefit Solutions has acquired J&D Benefits, a Markham, Ontario-based provider of customized benefit administration services. AGA completed the transaction in partnership with Novacap. This is AGA’s second acquisition outside Quebec; it purchased PPI Benefits in fall 2021.
The transaction amount was not disclosed. However, Martin Papillon, president and CEO of AGA,told Insurance Portal that he financed the transaction with stock and cash. Todd Rappitt, president of J&D Benefits, the firm he founded in 1986, has become a shareholder and vice-president of AGA, Papillon adds.
J&D Benefits has about 50 clients with about 45,000 members, Papillon says. They are mainly workers in the performing arts and medical care sectors. The AGA CEO adds that the J&D Benefits staff, about 20 strong, will continue to work for AGA.
Canadian expansion platform
J&D Benefits will now operate under the AGA Benefit Solutionsbanner, and Todd Rappitt will work closely with Martin Papillon to lead the scaling of J&D's solutions across Canada, the transaction press release states.
The acquisition will provide the J&D Benefits team with the resources and network to expand operations nationwide, the press release continues. “AGA is an ideal fit for J&D Benefits. AGA aligns with what J&D worked so hard to achieve. Being a Canadian based company with a mission to streamline administration and focussing on customer service are two fundamental values of J&D. They have exceptional depth, resources and experience that I know will benefit our clients,” Rappitt says.
A breakthrough for AGA
The release states that J&D Benefits specializes in multi-provider flexible benefits, and multi-employer platforms
Papillon told Insurance Portal that J&D Benefits is AGA’s first acquisition in administration services for employee benefit trusts. This solution is particularly well-suited to a unionized environment where workers are sometimes required to work for more than one employer simultaneously. “The trust ensures continuity of benefits for these workers,” he says.
AGA's CEO explains that the employer contributes to the benefit trust of the member’s union. A board of trustees manages the contributions to the trust and the benefits it provides to the union's members, he adds.
Large company
J&D Benefits devotes 75 per cent of its business to this niche market, which is mostly developed in English Canada, Papillon says, adding that “We are very pleased to be making inroads in this market with an organization that has strong credibility in this sector.”
Martin Papillon says that determining the volume of premiums earned is complicated because the income of a benefit trust is categorized more as a “premium equivalent.” “It's difficult to measure the underlying premium because part of the flow is in the form of contributions and not premiums,” he says. He did mention that J&D is a sizable organization “given that its clientele comprises some big business.”
Growing business outside Quebec
AGA Benefit Solutions intends to continue its consolidation outside Quebec, its CEO says. “Today, 70 per cent of our sales are generated in Quebec. We don't have a target figure. We try to be opportunistic: Novacap offers us targets every month, and we look at them very carefully to ensure that our business model is aligned with them,” Papillon points out.
In his development model outside Quebec, he says he is looking for firm owners who are interested in collaborating with AGA as entrepreneurs. “In this case, Todd Rappitt wanted to monetize part of his investment, but he still rolled over a substantial portion of his ownership into AGA shares,” Papillon explains. “We expect him to stay with us for 10 years or more. It’s a growth project.”
AGA Benefit Solutions claims to have more than 2,600 clients and to support nearly 155,000 members with the management and adjudication of their claims. The company also reports more than $400 million in premiums and $310 million in group annuity assets under management.
