Alliance gives FM advisors access to PPI tools

Two of Canada’s leading managing general agencies (MGA) have struck a deal, creating a strategic alliance between PPI Financial Group and Financial Management Group of Companies.

The deal will give FM brokers access to PPI’s actuarial, marketing and sales resources, while PPI brokers will gain access to FM’s broader product shelf.

“PPI has great resources on the sales and marketing side,” says Jim Virtue, president and CEO of Financial Management Group. “They are just ahead of where all the traditional MGAs are in that regard.”

While FM deals with a large number of brokers working in the middle-market, PPI is firmly focused on high net worth clients and business owners. The extent of their carrier contracts also reflects this difference, with FM offering a much wider selection to its brokers.

“From our perspective, we have brokers that need to access products outside of the PPI group of insurance companies,” says Kevin Wark, senior vice-president, business development, at PPI Financial Group. “They have tended to go to other MGAs to get those products, and we now have a facility to allow them to deal through FM for all their other product needs.”

Combined, the two companies account for between 10% and 12% of the insurance business written in Canada. That scale will allow the companies to work with selected carriers to develop new product for FM brokers.

The alliance “allows [PPI] to take some of the services that they have built over the last 30 years and extend those down into the broad brokerage marketplace,” says Virtue. “They have, over the last 10 to 15 years, really focused on only dealing with the very high end of the marketplace. PPI has an excellent reputation for being very innovative and proactive on the product side, so to bring that to our group is something we’re very excited about.”

Financial Management Group of Companies currently operates under a handful of different operating names, ranging from FM in the west and Burns Financial Group in Winnipeg, to Simon Jackson Insurance Broker in Ontario and AMC Brokerage on the east coast.

As part of the strategic alliance with PPI, we are looking at a rebranding exercise – we were actually doing that before discussions began with PPI – so that we could get better national recognition for the size of our company,” says Virtue. “We’ll be looking at some kind of common brand across the country.”

That new brand is expected to be unveiled in April or May, when FM will also formally launch its new online service offering.

“We believe that by enhancing our online facilities and products, we will both enhance the experience that our brokers have and allow them to be more productive, and also we will attract more brokers to our offering,” says Virtue.

He says the company currently has in excess of 1,500 active brokers working with it, pointing out that FM ranked in the top three MGAs with eight of the top ten insurance companies in Canada.

“We’re going to be able to give our advisors better tools to deal with their client; better sales ideas; help them manage their practice in a better way; and give them access to new and better product,” says Virtue. “I think it’s an exciting time to be an advisor at Financial Management.”

Under the deal, PPI is taking a 50% equity stake in FM, although Wark says an outright merger of the companies is not in the foreseeable future.

“The plan is to keep both organizations totally separate, but behind the scenes work together to utilize the best of what both organizations do to help support their current clientele,” he says. “The current management team at FM will retain a significant ownership stake, and will have a large role to play in growing the business in the future, so we wanted them to retain a healthy percentage of interest in the ownership of the business.”

(02/22/10)