Desjardins sets sights on further expansion

DESJARDINS Insurance is looking at mergers and acquisitions through two different lenses — large-scale p&c purchases and partnerships in insurance technology — but both are means to the same end: gaining market share through inorganic growth.

Denis Dubois, the caisse populaire’s executive vp of p&c insurance, said the acquisition of the Canadian operations of State Farm, which will be complete by 2019, required a lot of time and energy but also increased the company’s expertise.

“We are at the stage where we are ready to consider something else,” he said. “But it’s not just that it will be large-scale but making sure that it will be significant.”

He said Desjardins has also been eyeing the insurance technology marketplace and the company recognizes that partnerships with and acquisitions of technology companies makes more sense than developing technology in-house.

“Companies can spend countless hours and millions of dollars on creating technology so it’s easier to partner with experts than to develop your own technology,” Mr. Dubois said.

Desjardins already has experience with such partnerships through its telematics mobile application Ajusto and its home sensor program Alert, which detects water leakage.

“It can be on many different fronts but in the end it is to create value for our clients,” Mr. Dubois said. “Everything in the end needs to provide the value and as we continue our journey in improving client experience, technology and digital is just one aspect to get there.”

To improve the customer experience in 2018, Desjardins will advance its data analytics capabilities, using artificial intelligence, machine learning and connected devices, colloquially known as the Internet of Things.

“We are making sure that we rethink our processes and approach to digital — looking at things through that digital lens.”

Now that it has reached the final stages of transitioning State Farm Canada’s operations into its own, Desjardins Group is setting its sights on acquiring more p&c marketshare.

The acquisition made Desjardins the third-largest p&c insurer in Canada and group ceo Guy Cormier said the company is well capitalized, has a lot of liquidity and its internal growth is between 7% and 10% annually.

“We are in a strong financial position right now and we have strong market shares in different activities,” he said.

“But we want to expand and continue to grow non-organically.”

He said consolidation will continue to be a trend in Canada as the top p&c players vie for increased marketshare.

Mr. Dubois, executive vp of the p&c insurance division, said it is primarily looking for larger insurer targets in order to gain scale.

“It doesn’t mean we won’t consider smaller targets but the goal is to continue to gain scale,” he said.

Desjardins is also looking to improve its technology capabilities by acquiring, investing in or partnering with insurance technology companies.

Mr. Dubois said using technology companies’ expertise is more efficient than building in-house technology operations.

For example, Desjardins’ Alert program, a home monitoring program that helps prevent water damage, was created through a partnership with a technology company.

“We invested in that company so we could bring the Alert product to the market,” he said.

“To do that within our own organization would have taken who knows how long.”

With the State Farm acquisition, Mr. Dubois said Desjardins kept essentially all of the company’s agents “except a few based on a natural turn of events, not just (the acquisition).

“At the employee level, with State Farm having grown significantly for the last 10 years, we needed the talent — so there was some productivity gain.”

Mr. Cormier, the group ceo, said roughly 95% of former Sate Farm Canada policies, mostly auto and property insurance, have been moved to Desjardins and are now underwritten by its subsidiary Certas Home and Auto Insurance Co.

Desjardins said the former State Farm Canada business will gradually be rebranded starting next May.

Mr. Cormier said the new Desjardins customers are part of one of the safest financial institutions in North America.

“Desjardins is a co-op that is number one in Canada, that is really strong financially . . . the fourth safest financial institution in North America and the 34th safest financial institution in the world,” he said.

“I think policyholders can feel now that they are clients with a strong Canadian company that innovates a lot.”

He added that customers would also see the value of being with a co-operative.

“Our values are really strong as a co-op,” Mr. Cormier said.

“We are not there to bring value for shareholders, we are there to bring value to our clients and members.

“This is not something esoteric or unimportant — it means that for us the interest of our clients and members is a No. 1 priority compared to just a return for shareholders.”

He said the rebranding process would elevate the company’s profile across the country.

“This transaction was really strategic because it gives us the opportunity to expand outside Quebec (with) more than 500 new offices that will have the Desjardins logo and brand on their storefront,” Mr. Cormier said.

(More on the State Farm transition and Desjardins’ expansion plans will be presented in our Jan. 8, 2018 weekly edition. To subscribe, please choose the ‘Subscribe’ tab on our main page or email