On March 20, managing general agency Qualified Financial Services (QFS), headquartered in Toronto, announced that it had signed a definitive agreement to acquire 100% of Concord, Ontario-based PerformINS Canada Inc. This deal, expected to close March 31, adds 400 new advisors to the QFS organization, said Kevin Cott, QFS’ CEO.
“It roughly doubles our organization in terms of number of advisors, in terms of in-force service fees and in terms of first year commissions,” he explained in an interview with The Insurance and Investment Journal.
While Bruce Hammond, chairman and CEO of PerformINS, plans to leave the MGA after the transaction is closed, Mr. Cott said in an announcement that QFS “fully expects to retain most, if not all, of the business development team and administrative staff of PerformINS, ensuring little impact to our current service levels throughout the integration period and beyond.”
This is the third acquisition for QFS in the last year and a half. In 2011, QFS purchased Marketing Concepts Group and in 2012 it bought Mid Park Financial. It now has 6 offices servicing 6 provinces.
Over the past eight years, PerformINS has also been a consolidator, having amalgamated six firms, including Pinnacle Financial, Albanese Financial Group, Wise Riddell Financial Group, The Leading Edge, Panfinancial and Millennium Financial.
Mr. Cott underlined that in today’s MGA market with insurers rethinking their distribution arrangements, having enough scale has become increasingly important to ensure that an MGA can retain its contracts with insurance carriers. He adds that with the acquisition of PerformINS, QFS has achieved the size necessary to assure its advisors that they have a stable place to do business with for today and the rest of their careers.
A concrete example of how this growth has already impacted QFS is its relationship with RBC Insurance. Last summer when RBC slashed its slate of MGA distribution partners from more than 80 to 14 firms, QFS was left on the sidelines. Through this acquisition, however, QFS is now back on RBC’s roster since PerformINS had retained its MGA contract with the carrier.
“We have re-engaged with RBC Insurance as a result of this transaction and both RBC and QFS are excited about that,” said Mr. Cott.
He added that regaining this contract is a significant development for QFS. Prior to last summer, QFS was a “fairly prolific” RBC distributor. But after losing the contract, it was obliged to manage its RBC business “in a completely different and indirect way,” explained Mr. Cott. “Now, giving us the opportunity to deal on a direct basis again, opens up new doors and new avenues.”
Mr. Cott says before the acquisition, QFS and PerformINS were both top tier MGAs but coming together moves them from the medium-sized MGA category to the big league. “I would think that, by all measurements, we’d be in the top 10 of the MGA marketplace.”
He added that while this is likely the last “transformative” acquisition for QFS, there is no question that there will be additional acquisitions in the future that will be more geographic and strategic in nature. “We clearly want to expand further in the Atlantic region, we clearly want to expand further in Quebec and we are still very focused on expanding further in Eastern Ontario.”
Mr. Cott said that QFS is currently involved in a number of discussions regarding potential acquisitions, “some further along than others.”