As Manulife Financial heads into the final phase of its operational wind-down of Equinox Financial Services, three Quebec-based Equinox Marketing Centres are embarking on a new joint venture.
In an exclusive interview with The Insurance Journal, Caron Czorny, executive vice-president and chief operating officer for PEAK Insurance Services, said that an agreement has been reached between PEAK, Équinoxe des Laurentides and HBO Financial Services. The three former Equinox Centres are creating a new jointly owned company to act as a centralized administration centre and merge their managing general agency contracts that they held with Equinox product suppliers: Manulife Financial, AIG Life, RBC Insurance and Standard Life.
This new company, which will be launched in mid-May, is called AgenZ Group Inc. The A and Z are capitalized in the name to indicate that this new company handles administration services from A to Z, she adds. AgenZ will be located in Laval, Quebec. Ten experienced employees, coming from each of the three partners, will staff this office.
Ms. Czorny says that she, Réal Bolduc of Équinoxe des Laurentides and Boris Ozbalt of HBO began negotiating the agreement last fall. Mr. Bolduc has been named president of AgenZ for year one of the firm’s existence. The new company is in the process of getting licensed across Canada.
The reason that these three MGAs came together to form a new company is they felt that with the demise of Equinox, they were losing some efficiencies, says Ms. Czorny. By merging the three partners’ MGA contracts, AgenZ has the critical mass to meet volume requirements, have a stronger voice with insurance suppliers, gain access to better marketing programs with insurers and have one place to manage chargeback responsibilities.
While they couldn’t recreate an Equinox, they did want to have an alliance where insurers would consider them as one, she adds. The insurers had certain requirements for the three MGAs to meet before agreeing to deal with them as one. They required “a strong contracting entity for growth, one voice, one administration system, a limited number of partners and partners that the insurers would approve of,” explained Ms. Czorny.
The former Equinox suppliers are supportive and have approved of this new joint company, she says. “The insurers are very excited for us.”
The partners chose to work together for specific reasons. One, they have all their MGA contracts in common, having all been Equinox Centres. Two, they share the same technology platform – VirtGate by CoVirt.
Ms. Czorny believes that this centralized administration model, is a unique concept in Canada. “I don’t think that MGAs have ever got together to form a merged back-office and all been equal co-owners.”
AgenZ's objective is to “harmonize our methodologies, implement our best practices and grow our economies of scale,” she explains. “We want to be the premier provider of bilingual back office services to us and we may offer these services to others in the future, but that is a secondary mission.”
In addition to the former Equinox suppliers, AgenZ will also administer other insurers’ contracts, adds Ms. Czorny. At press time in early April, agreements with three other insurers were being finalized.
Together, the three partners have a sales volume of about $2.5 to $3.0 million in first year commissions that will be administered through AgenZ. “We’re the second largest player in Quebec for Manulife now,” she comments. Business growth goals for the first year are 10-15% for the first year. The partners have set this “modest growth goal” for the company due to it being the start-up year, Ms Czorny explains.
She does not believe that there will be any conflict between the three MGAs sales forces. “We’re not competing, we’re complementary,” she says, noting that HBO serves an upscale anglophone market in the Montreal area, while Équinoxe des Laurentides focuses on the Laval and Laurentian region of Quebec, whereas PEAK has a strong base in Quebec and a national presence.
While their back-office is united through AgenZ, the three partners will continue to maintain separate business offices, individually market their own brands, pursue their own business development, conduct their own advance case work and offer educational services out of their separate locales. Because of this, the launch of AgenZ will not change much for the network of about 400 active advisors presently working with the three MGAs, she adds. “Contracts and compensation won’t change. But, AgenZ’s deeper team and cross-training potential and administration optimization, will allow us to service our advisors even better.”
Since last July when Manulife announced its decision to terminate the Equinox network, which comprised 34 independent marketing centres, a phased wind-down of operations has taken place. The expected wind-down completion date is July 2007. In the coming May edition of The Insurance Journal, look for more news on the transition plans of other former Equinox Marketing Centres.