Portfolio balancing will be a critical part of North American insurance companies’ mergers and acquisitions (M&A) strategy in 2022, amid the new normal brought by COVID-19. The pandemic did little to tamp down on M&A appetite within the industry. A Deloitte study noted total deal volume across underwriters and brokers in 2021 increased 40% year-on-year compared with 2020.
The pandemic made insurance leaders acutely aware of the need to optimize their portfolios. Whether boosting capabilities in certain lines, or dropping underperforming ones, firms will be scaling to appropriately maximize their value and service offerings to clients.
Take British Columbia-based Axis Insurance Managers (Axis Insurance), which recently announced its latest acquisition - BMG Insurance Brokers (BMG), a specialist firm dealing with aviation and aerospace risks. BMG began operating under Axis Insurance on June 01, 2022.
Alex Meier (pictured), CEO of Axis Insurance, spoke to Insurance Business about the rationale behind the move: “As we want to build out a national best-in-class insurance brokerage, we feel that there's two areas where the business is going on: the transactional side and the advisory and consultative side. We want to focus our energy more on the complex advisory consultive side, and we want to be experts.”
“What we're doing is building out what we call practice groups. We've identified 15 already, and that allows our team to really focus and specialize in those areas,” said Meier.
A privately-owned company, Axis Insurance is one of the region’s fastest growing brokerages and deals in risk management and insurance services. Its commercial offerings include mining insurance, captive solutions, professional liability for engineers, architects and geoscientists and equipment breakdown, among others. Meanwhile, its personal insurance lines include fine arts insurance, high value homes, insurance for recreational vehicles, wine collections, and yachts. Meier said they hope to focus on growing these specialties as the firm expands.
“What’s very appealing about BMG is that they specialize. We think they're best in class in what they do. There's a lot of alignment with our culture. They believe that the client is first and foremost, and they focus on providing the best service and advice possible,” he said.
The partnership faces many challenges ahead as lingering COVID-19 challenges and new regulations fuel changes in the aviation and aerospace risk landscape. “The sector has been hit hard in different areas, I would say even beyond COVID-19. The market goes through cycles, but during COVID, we went through a hard market, so not only were a lot of customers faced with reduced revenues in their different operations, but they were also facing large [cost] increases,” Meier said.
Moving forward, Axis Insurance hopes to offer steady support to its new group. BMG managing directors Maureen Crockett and Brian Julien will lead and expand the aviation and aerospace practice.
“BMG has done a great job and what we can do is offer more support being a larger broker now. Certainly, in the back office, a lot of the folks that were dealing with customers also had to deal with HR, some finance, and technology. This will allow them to just focus on the customer experience,” Meier said.
Amid the challenging economic outlook, Meier said resilience would be key to managing their growth strategy: “We obviously need to be resilient in our various businesses because the wind can blow in different directions. Being resilient is important so that we can be there for our customers and help them through those difficult times.”
With about $40 million in annual revenue, Axis Insurance is not looking to slow down. “We’re looking to expand in all industries. We want to be a true national firm that we consider best in class. Our plan is to be $100 million in revenue in five years’ time,” Meier shared. “So, we'll continue to build out these practice groups through expertise. We have a lot of expertise already in our current organization, so we'll look to support and build that out,” he continued.
“Where there's opportunities to hire other folks that can help enhance those practice groups and offerings, we will look to do that, and where there's opportunities to acquire existing operations that that meet our vision and culture, we will look to do that as well.”
