David Wash, president of US-based managing general agent Zodiac Insurance Services talks M&A motives and why being a streamlined digital organisation is a key competitive advantage
Merger and acquisition (M&A) activity has dominated trade press headlines consistently over the last 12 months. In fact, I think I’m even right in saying it’s been a record year for deals worldwide, with significant transactions announced almost on a monthly basis.
With all this deal activity, analysts have pointed to revenue growth as being a main driver behind a lot of the movement we’re seeing – indeed, a sign of the times in a climate where many larger businesses struggle to achieve significant organic growth.
But in my experience, for a deal to be termed truly successful, there needs to be more of a motive in play than simply top-line growth or a great valuation price. And this has certainly been the case in our story with AFL.
AFL’s decision to invest in Zodiac represented a milestone moment for myself and the business that I founded in 2011. Since Zodiac’s inception, we’ve been recognised as an expert MGA, providing specialty products as an insurer, broker and Lloyd’s Coverholder with licenses in 48 states.
We first began working with AFL when we hired them as our London broker and it didn’t take long to realise there could be more to this relationship than we had initially thought.
Quite simply, AFL found London placement for our products – complex classes and difficult risks – where others had failed. And they did it quickly. That’s what you want from your broker.
The specialist London market, with its hands-on, bespoke approach to specialty risk, has always been a natural home for many of our products, which are associated with events and entertainment insurance as well as professional insurance for accounts from brokers to captives, carriers, actuaries and underwriters.
In an interview with Intelligent Insurer AFL CEO Bob Finch and myself made it clear that the deal was driven by our shared client-first focus on bespoke products, and our recognition that there is strong demand for independent expertise and advice.
AFL represents one of the only truly independent, boutique international brokers championing a strong client-first proposition.
A digital platform
At the same time, as AFL’s CFO Chris Gagg mentioned in his recent blog, while insurers are considered to be very good at M&A –“getting the next deal comes naturally to us”- companies can really struggle with integration post-deal.
AFL is embarking on a company-wide digital standardisation and streamlining, which will bring huge benefits in terms of efficiencies, analytics, customer interaction and claims experience.
I totally agree with Chris’ comments. And the way in which AFL is embedding technology will also help revolutionise Zodiac’s offering, particularly with regards to its lack of legacy systems or unwieldy bureaucracy.
I see being a streamlined digital organisation as a key competitive advantage. We have the agility and responsiveness of a smaller, boutique organisation, but the scope and international reach that efficient digital and online processes bring us, combined with AFL’s excellent global relationships through the Worldwide Broker Network. It’s the best of both worlds.
People and culture
Bob and I also highlighted the excellent cultural fit between AFL and Zodiac in another recent interview with Insurance Journal. It has been very gratifying to find an innovative management team in AFL who see the world through the same lens as I do, and have the same vision for a culture of innovation and positivity in our teams.
In a year where M&A has been more than just an industry buzzword, there will be lots of success stories and unfortunately some less successful ones. We are confident that our deal will stand out as a successful integration story for two entities striving to be the best in class for their clients – our future relies on getting this right.