November 9, 2018 10:15
Ron Pavelack and Serge Lavoie | Photo : Réjean Meloche
Thunderclap damage insurance. Echelon Insurance is sold to CAA Club Group. The holding company that owns Echelon Insurance Echelon Financial Holdings, made the announcement this morning. Transaction amount: – $ 175 million (M$).
The transaction must now be approved by the shareholders of the company. A vote is expected in January. It is expected to close mid-year, the time that it is approved by the regulatory authorities
Why is this transaction ? The board of directors of Echelon had undertaken a strategic review of its process. A special committee of independent directors had been formed in this sense. It has filed several solutions to the board, one of which was the sale of the subsidiary, Echelon Insurance.
“We believe that CAA will allow Echelon to achieve a higher level of service to its brokers and customers,” said Murray Wallace, president of the board of directors of Echelon.
Buy the business model Step
The Journal of insurance spoke this morning with Ron Pavelack, national vice-president of business development and responsible for the Quebec region, in Echelon. He stressed that CAA purchased before the business model developed by Echelon.
“CAA Insurance was primarily as a direct insurer, which dealt with a few brokers. When you buy a company with brokerage, this is not a volume that you buy, but rather the relationships that brokers have with their customers, in addition to the existing staff. This is what comes to seek CAA in us acquiring. “
Mr. Pavelack adds that nothing changes on the business side with this transaction. It is also said to have spoken with a few brokers, who have responded positively to the new according to him.
Who is CAA Club Group ?
CAA Club Group consists of two associations using the brand image of the club to motorists, CAA South Central Ontario and CAA Manitoba. The collection has two million members in Ontario and 200,000 in Manitoba, we can read on its Web site. The association also sells insurance through its subsidiary, CAA Insurance.
Last may, the insurer has launched a programme of car insurance using telematics and for which the premium is modulated according to the distance travelled by the insured. The program, named CAA MyPlace, works with a device plugged in the vehicle and connected to a mobile application. It is aimed at the market of drivers who do a go-back-to-work, to retired persons who visit family on the weekends and those who drive less than 9,000 km per year.
“Committed to the success of independent brokers “
Jay Woo, president and CEO of CAA Club Group, said that this transaction will allow his company to enrich its offering in the insurance markets for auto, home, sub-standard and enterprise. “We are committed to the success of the independent broker, he also mentioned. We want to do in Step one of the marks of the most reputable in Canada, for the benefit of brokers. We support them with a technology of avant-garde. CAA will continue to provide brokers with the transparency, tools, and the fair treatment which they need to grow their business. “
The message of Serge Lavoie to brokers
The Journal of insurance has obtained a copy of the message that Serge Lavoie, CEO of Echelon, has transmitted to the partner brokers of the insurer. It is stated that ” the strong relationships with the brokers, the wide range of products and the growth of Step will offer to CAA a solid platform for expansion in Canada. “
The CEO of Echelon adds that CAA offers insurance products to its members through its network of agents in over 40 years, and has recently expanded its distribution strategy to include the distribution through brokers. “They understand the value that brokers bring to insurers and clients and have expressed their commitment to the network of brokers. “
He concluded his message by thanking dealers for their support. “Until the transaction closes, we are happy to continue to do business with you and inform you of developments over the next few months. Although some of the details related to this transaction are not yet finalized, we will do our best to respond to your requests and keep you informed. Your partnership has contributed to our recent growth. I want to assure you that you will continue to be an integral part of our history. “