Managing general agency consolidator, Bridgeport Financial, is looking to do for the insurance world what Jean Coutu did for pharmacies: franchise, standardize, and gobble up market share.
Bernard Bissonnette, president, Eastern Canada for Bridgeport, wants the firm to become a national consolidator and a household name in distribution. Launched in May 2004, Bridgeport is looking to acquire seven to eight managing general agencies (MGAs) in Eastern Canada in the next 18 months. Its first Quebec deal was expected to close December 6, but at press time the deal was not yet finalized. Mr. Bissonnette did not want to disclose the name of the MGA.
The firm’s goal is to create brand-name MGAs and the same way that Jean Coutu made its name synonymous with pharmacies and revolutionized that industry. Bridgeport wants to do the same with life insurance distribution.
The industry needs to be better organized says Mr. Bissonnette, and he wants his company to be the one to organize the distribution system. “The distribution system in Canada is not healthy; there is a lack of new blood entering the field, a lack of training and advisors are demanding too-high commissions which are squeezing the MGAs,” he says. The industry needs organization he stresses. “No one in the last ten years has been able to get organized. There is no national carrier dedicated to the life business. Our goal is to be the leader in distribution for life insurance.”
Like Jean-Coutu, Bridgeport is looking to create a semi-franchise approach. Its goal is to acquire 75% rather than 100% of the businesses. “Our intent is to create an exit strategy for business owners who are looking to retire in a few years time.”
The MGAs will fall under the banner name of Bridgeport, which will bring more coaching to the MGA system, says Mr. Bissonnette. “We went from an industry which was mainly captive and provided a lot of training to today’s MGA system which has virtually no training. We went from two extremes and Bridgeport is trying to bring the pendulum somewhere back in the middle.”
He highlights that the two main areas in which advisors have problems are getting referrals and closing the sale. In Quebec, there are 6,000 active brokers, but only the top five per cent account for half of all business. “Bridgeport will help the advisors get referrals. We will pitch communities that are being overlooked. For example, pitching to entrepreneurs in the gay community. We will host a conference, pitch them and those that are interested can leave their contact info, which we will give to advisors.” He adds that Bridgeport also has plans to send experts to help advisors close deals.
Mr. Bissonnette also raises the issue that there are too many MGAs in Canada. He says it costs insurance companies more to deal with many MGAs. This, he says, makes a perfect landscape and timing for his firm. “Anyone who would start a new MGA in Canada today would be committing suicide.” In turn, Bridgeport has the financial backing of a few carriers, which Mr. Bissonnette says he could not name.
The Insurance Journal reported in its October edition that a company out West is also looking to become a national consolidator. Also backed by insurance carriers, Abex Value is in discussions to purchase three MGAs in B.C. and a large national MGA in Toronto.
The Insurance Journal also learnt that the MGA AFG Canada recently sold to another new consolidator: Perform Ins Canada.
Fred Wolfe, former executive vice-president sales and marketing at Transamerica Life, is one of the main people involved in the company. At press time, we were unable to speak to Mr. Wolfe about the new venture.