Behind the big brokerage merger between ONE and BSI

ONE Insurance and BSI Insurance are combining to form the largest Manitoba-owned brokerage network, serving the province through 28 branches in 26 different communities.

The new company would bring together two of Manitoba’s oldest insurance brokers, with a total of more than 200 employees. ONE Insurance has served Manitoba’s communities for 70 years, working with more than 15 insurance providers, while BSI has been in business since the 1960s.

“We are excited to bring these two great Manitoba companies together,” ONE Insurance president and CEO Nicholas Rawluk said of the deal. “This merger will result in greater opportunities and services for our employees, customers, and the communities that we serve.”

Both full-service brokerages offer personal and commercial insurance, as well as farm insurance. And while each company benefits from the diversity of combining business segments, overall the deal provides both companies with scale and a deep knowledge of the province’s needs and markets.

“The goal here is basically identical ownership,” BSI Insurance CEO Pete Tessier told Canadian Underwriter, commenting on the benefits of the merger. “A lot of efficiencies go into helping us scale up. There are very similar projects between the two different companies, and we want to grow rather than duplicate efforts. We want to work together on the same initiatives to grow with scale and maximize benefits as we embark on initiatives to help modernize brokerages, invest in technology, and deliver a better customer experience.

“Why do it twice? Let’s do it together and maximize the outcome.”

Tessier will join the combined company executive team as vice president of innovation and strategy.

Rawluk will become president and CEO of the merged company, which will take on the ONE Insurance brand. Both companies will operate under their existing brands while teams work behind the scenes to integrate their operations.

Rawluk said he expects the merger to be completed and the companies operating as one brand by early 2024.

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The two companies are uniquely well-suited to merge, particularly geographically, Rawluk commented. “They have extensive branch networks that don’t currently overlap, which means the new company will have exceptional coverage throughout most of Manitoba.”

For example, “Interlake-based ONE Insurance has 12 branches, with three in Winnipeg and the rest in neighbouring communities around the central region and into the Interlake,” Rawluk elaborated. “St. Norbert-based BSI has 16 branches reaching southeastern and south-central Manitoba, including one in Winnipeg. Together, the combined company will manage over $200 million in annual sales.”

Asked if he thought the higher cost of capital — due to increasing interest rates — would dampen appetite for brokerage consolidation generally, Tessier felt current economic conditions would not slow brokerage consolidation down, so much as make the appetite for deals more selective. More specifically, he said the nature of the ONE-BSI merger minimized the impact of capital costs.

“In our case, we had mutual ownership, which was literally three mutual companies,” as Tessier explained to CU. “So we have a unique opportunity here, where money isn’t necessarily changing hands as much as diversifying ownership percentages. Money isn’t coming onto the table to buy one entity. This is about bringing the brokerages together because the owners are essentially the same, the third being a minority one, and they’re simply reducing ownership stake. So this is a great merger because it literally does not require intensive capital to do.”

Rawluk hints the merged entity maintains an appetite for more M&A growth in the future. “This merger will result in greater opportunities and services for our employees, customers, and the communities that we serve. It also positions us for further growth and investment in the future as we will become the largest brokerage headquartered in Manitoba.

“We are committed to our local footprint and our combined size will allow us to be a competitive option for those brokerages looking for a succession plan or collaborative partner.”

Asked what would attract brokers to join the new entity, Tessier emphasized the strength of the local roots of the brokerage.

“We want brokers to know that there is a growing home-grown entity that is reinvesting and doubling down on the Manitoba market and the Prairies,” Tessier said. “We’re still a Manitoba-based company, we’re not coming in from elsewhere to understand things. We understand the market we understand the people, the cultures, the communities, and the demographics.

“I think that’s a very compelling value proposition for someone who’s looking to change, maybe to diversify their ownership group or holdings, and know there’s someone who is not going to abandon the principles on which they have built their business.”

 

Feature image courtesy of iStock.com/Gajus