Navacord CEO and chair on building a "forever business"

Canadian brokerage reveals multi-billion-dollar premium ambitions

Navacord CEO and chair on building a "forever business"

Insurance News

By Jen Frost

For Navacord, 2022 has seen deals and growth continue at pace on its mission to build “the great Canadian brokerage”.

“This year, we will bring in 50-plus new advisors into our organisation, and next year one of our focus areas is to see if we could bring in 100 new advisors into our business,” said Navacord CEO Shawn DeSantis (pictured left).

The business currently sits at over $3 billion in premium roughly split across two thirds property and casualty (P&C) and one third benefits, and the Canadian brokerage is targeting growth to more than $5 billion of premium in the next four to six years. For the most recent full year, it saw double digit organic growth.

Some of the most recent additions to its broker arsenal include Insurance Store, one of its biggest partnerships this year, and Ontario-based brokers Binks and Newman. In August, it partnered with specialty MGA GASS. It has also tapped Greg Irvine as its first underwriting solutions president, with a mandate to drive growth and bring products to clients that may not be so readily accessible from the traditional market.

Navacord may be highly acquisitive – but its leadership team do not see it as a ‘consolidator’. Nor do they see it as a traditional ‘acquirer’.

“We don’t use the word acquirer, we use the word partner,” said DeSantis.

“We talk a lot about building the great Canadian brokerage, and so when we think of businesses that decide to join Navacord, it’s about them wanting to be part of something bigger.

“Where we think consolidators are consolidating revenue up in order to have a larger transaction, we think of ourselves as bringing partners into our business to build this great Canadian brokerage.”

For Navacord executive chair T Marshall Sadd (pictured right), it’s a similar story.

“If you talk to our broker partners, I hope they wouldn’t say they’re selling into Navacord, I hope they’d say they’re buying into Navacord,” Sadd said.

“We have many examples where our broker partners were a certain size, and we’ve helped them double their business or more than double their business in a two-to-three-year period, because being part of something bigger allows them to grow faster.”

As for how Navacord can assist its entrepreneurially spirited insurance leaders, Sadd gave the examples of scale, talent, succession planning, and access to products and services. Partner organisations are also, to a large extent, able to maintain their own culture and model where it comes to office life, for example in how they have executed back-to-office plans following COVID-19 changes.

DeSantis and Sadd have led Navacord from its 2014 launch, when Jones Deslauriers Insurance (where DeSantis remains CEO) and Lloyd Sadd Insurance Brokers joined forces to create the business. Since then, it has swelled to having more than 200 broker shareholders on board.

Its model sees its broker partners take up a stake in the Navacord business, while it typically takes a 100% stake in the sold brokerage. Private equity (PE) investor, Madison Dearborn Partners, which also boasts NFP and UK headquartered broker The Ardonagh Group in its stable, owns half of Navacord.

This means that half of its shareholders are individuals working in Canada, according to the broking bosses.

“These are individuals who have invested their money in the larger brokerage, and this drives really strong financial alignment, and gets our whole team focused on building this great Canadian brokerage,” DeSantis said of its broker shareholders.

“There’s one single common thing among all the people that end up joining - they love the business they built, and they want to see that business evolve, and go forward,” DeSantis said.

“These people really want to see their business evolve versus [those that say] ‘here, take my business, I’m gonna go hang out in Florida, Palm Springs, and you guys run this’.”

Fresh from 2020 and 2021’s lingering pandemic disruption, 2022 has thrown up its own set of challenges for business leaders – not least a difficult economic outlook.

“The current economic situation, for all businesses, is challenging on a number of fronts,” said DeSantis. “First of all, it’s tough to predict what the future looks like; it’s difficult to understand where inflation will go, and one of the big drivers that’s happening is interest rates.

Economic challenges have not had an impact on broker valuations, DeSantis said, “but that might be coming.”

“We’ll have to see if that evolves over a period of time, but we haven’t seen that at this point in time,” he said. “We are continuing with our strategy, we’re just probably going to be more focused on the right opportunities and the right partners.”

“It’s causing us to pause and think about what’s in front of us and where we want to allocate capital,” said Sadd. “It is more expensive, for sure; our debt is more expensive, and so we’re just more aware.”

The extent to which any economic worsening challenges the insurance M&A market remains to be seen, though Sadd speculated that a slowdown was possible.

“It’s not happening today right at this moment, but it feels like that it could happen,” Sadd said.

“If it was going to happen, this is the time for it to happen, but we haven’t seen that yet,” added DeSantis.

In terms of Navacord’s focus into the new year, talent, technology, vertical integration, and bedding in its more recent partners are high on the agenda.

“We’ve talked about building a forever business, and we’re now of this scale and size in the Canadian marketplace – our business is positioned well for that,” said DeSantis.

“One of the things that Marshall and myself spend a lot of time thinking about is succession of the business, how are we building the future leaders of the business, the future replacements for our senior corporate team, the future replacements for these entrepreneurs?

“That’s a track that we’re down now and we don’t really see our story ending; we think we’ve built a great brand in the Canadian marketplace, and the question we keep asking ourselves is: how do we have that brand continue on for an extended period of time?”

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