Over the last 18 months, Jean-François Chalifoux has reorganized SSQ Financial Group’s structure. When he joined SSQ as CEO in the fall of 2015, the mutual insurer was composed of seven different entities. It is now one united company.
“This is a time of great change for SSQ,” said Chalifoux in an interview with The Insurance and Investment Journal. The meeting was held March 30, in the company’s new offices in Longueuil, Quebec.
Many believe that being a medium-sized insurer, like SSQ, is not an advantage when it comes to meeting the challenges of the future. In a changing business environment with more and more large players, Chalifoux does not deny there are significant challenges coming. However, he sees benefits in SSQ’s size.
“Our size brings us opportunities. It gives us more agility than some other companies. We have a strong entrepreneurial spirit. I am very optimistic about the future, despite the challenges ahead.”
Chalifoux’s reorganization of SSQ was a four-step process. The first phase was to simplify the group’s operations, followed by the integration of business activities.
“We went from a structure that was segmented by business line to a more integrated one. We combined our activities on the manufacturing, operations and distribution levels. Our managers are now involved in everything and have responsibilities across product lines. This means they now have roles in life insurance and property and casualty insurance. We believe we are the first insurer in Canada to have this kind of integrated, multi-risk platform.”
SSQ then introduced a new strategic plan, which will be in effect until 2019. One of its main objectives is to increase profitability by 10 to 12 per cent.
SSQ is now in the fourth phase of its reorganization, which is to communicate its business culture.
“This culture has to reflect our vision for SSQ’s development. The goal is to have a better performing and more innovative group in a changing world.” This is in addition to the goal of maintaining its client satisfaction rate which ranks in the top quartile among insurers. This objective is explained in the company’s strategic plan.
This major reorganization has one goal – to boost cross-selling. SSQ hopes to earn $100 million in such sales over the next three years. Chalifoux says the insurer had been lacking in this regard, even though the company does business in the group insurance, life insurance, property & casualty insurance and investment sectors.
“Often our clients would only see one part of the company. Despite our modest size, doing business with us was complex. This is one of the reasons we only have one website now, instead of one for each business segment.”
Chalifoux is betting that it will now be easier for clients to understand the company. “We will be better able to identify and meet their needs. We will deliver a smoother experience. We now have to make the right choices, to choose the right technology and to position ourselves in the right business sectors.”
And how will SSQ make the right choices? “We will need to be rigorous, he says. We will have to analyze the costs and profits in detail, but also rigorously follow-up on our strategies and our investments.”
He still sees potential for direct distribution in the Quebec market, especially with respect to life insurance. “Simple products will be developed, which will be directly distributed.” He adds, however, that there will always be a place for advice.
Group insurance accounts for two-thirds of SSQ’s sales revenue. All segments combined, Chalifoux estimates the insurer reaches approximately three million people across the country. Other than its insurance and investment activities, SSQ is also active in travel insurance and distributing insurance via car dealerships.
“We will do more than simply sell insurance. We will be in a good position to offer advice, especially in health insurance, since we have a strong position in group insurance. We will offer the right solution and follow up with clients throughout the different phases of their lives,” says Chalifoux.
Diversifying business activities would also allow SSQ to improve the currently slim profit margins in group insurance. “It would stabilize revenue, and reduce volatility. To succeed, we must reduce costs in segments in which we are a smaller-sized player. Success lies in execution.”
Creating an ecosystem
With its transformation, Chalifoux says SSQ will be better able to develop its employees. “Before, we had seven entities. Our employees were trapped in this framework. There weren’t as many opportunities for promotions. We will now have more mobility among our staff. This will favor the development of our managers.”
Chalifoux says moving to this new integrated model was most difficult for the company’s 35 highest managers. “It was a daily challenge for them. There was a tradition – which we also find in the industry generally – to rely on products to build our structures. We asked ourselves what the priority should be: to develop our products or better manage operations? The fact is, we want both. We also realized that those who focused on product development didn’t have access to operations management.” This lack of connection meant that those two key areas did not understand each other’s work enough. “The new structure will change this,” says Chalifoux.
Many front line employees remain associated to a designated segment, notably because of regulatory issues.
In developing the new structure, he was inspired by practices in the rest of the world. “In Europe, we find many models like the one we are developing…Only Canada is still segmented in this way.”
As a result of SSQ’s transformation, Chalifoux believes the company could generate recurring synergies of $30 million. This is the objective set in SSQ’s strategic plan.
To boost growth in the future, SSQ intends to focus on its partnerships with third-party administrators (TPAs) in its group benefits portfolio. He says SSQ is looking to diversify its distribution approach. “We will work more closely with actuarial consultants.”
Chalifoux adds that 50 per cent of SSQ’s individual life insurance sales come from outside of Quebec. “We are growing more quickly there. However, we still have a lot of (growth) potential within the Quebec market.”
SSQ, however, is not planning to enter the property and casualty insurance market outside of Quebec in the near future. “We will concentrate on maximising cross-sales. We want to capitalize on this first and foremost over the coming years.”
SSQ sees premium growth of eight per cent in 2016
During its annual general meeting scheduled for April 25, SSQ Financial Group will announce that it saw growth of eight per cent in premiums in 2016 compared to 2015, says Jean-François Chalifoux, SSQ’s CEO.
He also told The Insurance and Investment Journal that he would be announcing that the company saw improved financial results. “Our experience has improved in group benefits. We will see a higher profit than we did in 2015.”
Chalifoux says SSQ will benefit from an agreement with Mercer announced in May 2016. The agreement provides for the launch of new individual health, travel and life insurance products for retirees of the companies in Mercer’s Canadian portfolio. “It’s the model they use in the United States. We were very proud to sign this agreement, for Canada. We will learn from it,” he says.