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Affiliated dealers : a «novelty» already existing at Intact

by

Hubert Roy

June 19, 2018 07:00

Photo : Rawpixel.com

During a debate on bill 150, theAlliance for a stronger brokerage fort has proposed to create a new title : the affiliated broker. Upon verification, this «newness» is a status used at Intact financial Corporation since 2015.

The 13 founding members of the Alliance for a stronger brokerage fort are brokers who have financial links with groups Intact. For the Alliance, the affiliated broker is still a broker, because he has access to multiple insurers and products to its customers. It has, however, made the choice to concentrate to a certain degree from an insurer for goods and generalists, as well as having access to a share capital flexible in order to respond to the challenges of entrepreneurial succession.

The proposal of the Alliance was greeted by a certain skepticism, both by the industry and parliamentarians. At the time of going to press, we did not know the outcome of the debate, given the end of the parliamentary session.

Mention in the annual report

Even if this title does not exist in the current regulatory framework, Intact financial Corporation uses to record its financial results in investments. In its annual report 2017, the insurer is shall report to the management of its investments in distribution. The brokers within which it has financial reports are identified as affiliated dealers.

«As defined in the annual report, the appellation brokers affiliates, consisting of an appellation widely used in the industry, refers to the brokerage firms in which we hold an investment in equity securities or to which we provide financing, has confirmed to the Journal de l’assurance Maude Savard-Kokinski, a spokesman for Intact.

Good performance

In its annual report, Intact indicates that its investment in the distribution generate a good return. Some indicators show. Intact there, reports that its affiliated dealers have generated an operating margin of nearly 30 %. «We anticipate that the net proceeds of the distribution will continue to increase in the future «, one can read in the annual report.

This net income amounted to 132 million dollars ($M) in 2017, compared to$ 111 Million in 2016 and$ 75 Million in 2013. Earnings before interest, taxes, depreciation and amortization (EBITDA) of investments in distribution, there has been$ 158 Million in 2017, compared to$ 134 Million in 2016 and$ 91 Million in 2013.

Over the past five years, Intact reported to have made investments of nearly 570 M$ related to distribution activities, including$ 102 Million in 2017 and 169 M$ in 2016. In addition, Intact indicates that loans to dealers that have generated interest income of$ 17 Million in 2017. These are recognized in the net income of the investments. The annual report the insurer also indicates that the affiliated dealers of Intact reported to the insurer 26% of its direct premiums written in Canada.

What is the role of brokers in quebec do they generate in the investment Intact distribution ? «This information is not public information,» said the insurer, of the insurance Journal.

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