Navacord recently announced its biggest acquisition ever with its purchase of RWAM Administrators and Programmed Insurance Brokers (PIB). Navacord CEO and president Shawn DeSantis (pictured left) and Navacord executive chairman T Marshall Sadd (pictured right) sat down with Insurance Business to discuss the deal and their plans to establish a nationwide presence.
Terms of the RWAM and PIB buys were undisclosed, but the purchase has been hailed by the business as its largest deal yet. This business move is part and parcel of a larger scheme of procuring businesses to carve out the company’s presence within the Canadian marketplace, according to DeSantis, with partnership discussions currently ongoing with more than 30 suitors.
With RWAM, Navacord was eager to build out an underwriting specialty portfolio.
“When looking around, they are experts in underwriting risk and claim settlement in the pension and benefit space,” DeSantis said.
What drew Navacord to PIB was its geographic location in Elmira, which is part of the Woolrich Township north of Waterloo.
“We are able to carve out a business portfolio there,” Sadd said.
“They also bring to us significant experience in the benefits and wealth management sectors, something we were very interested in adding to our capabilities.”
The process of acquiring PIB and RWAM took about six months from ideation to completion, in line with the typical trajectory of a business deal for Navacord, according to its leadership team.
Navacord is primed to expand its operations significantly, the leaders, who have previously revealed their four-to-six year $5 billion premium ambitions, said.
One of the guiding principles of its plan of action is entering into new terrain across Canada.
“We see great opportunities in Atlantic Canada, Manitoba and Quebec, and we are keen to establish a presence there to be able to offer more services to more Canadians nationwide,” DeSantis said.
This includes business ventures in the property and casualty space, as well as bolstering Navacord’s wealth advisory practice.
Sadd added that the company is also strengthening Navacord’s underwriting solutions business, which consists of MGAs.
“We want to be able to accomplish this through both organic and inorganic growth opportunities,” he said.
With rising interest rates and an increasingly difficult economic climate, businesses are facing more hardships where it comes to initiating and sustaining growth. Acquirers like Navacord are not immune, and the broking business has made capital changes and upped scrutiny where it comes to deal partners in a bid to combat any impact.
“It is getting harder to find capital to move business plans forward,” DeSantis said.
“As a result, we’ve changed our capital structure to allow us to continue our strategy and access capital. We are very thoughtful about who we choose to do business with given the cost of debt.”
While many smaller companies may struggle with future operational and growth plans, Navacord’s acquisition plans are not meant to eradicate the diversity of options within the marketplace.
“Some of these businesses might need investment in technology, while others may be looking for support in capital to invest in new talent,” DeSantis said. “When we get in talks with these businesses, we want to assure them that this is not an opportunity to sell out.
“Rather, they can join a bigger operation with more resources and not sacrifice the work atmosphere that they have grown accustomed to.”
For Navacord, when considering a potential partnership, there are three questions that need to be asked.
The first is, can the business be scaled and brought on a journey to growth?
Secondly, is the leadership at this company a natural fit for Navacord and can they build a successful business together?
Lastly, does the company have a strong client value proposition? Is it enough to sustain interest and business over an extended period of time?
“These macro themes are what we consider before we reach out to initiate a potential acquisition,” Sadd said.
Looking forwards, Navacord’s pipeline remains “robust”, according to DeSantis.
“We want to be able to work with other businesses and use our resources to really augment their operations and drive success,” he said.