We don’t often hear about Canada being an exciting market for growing a financial services business these days. We’re more likely to hear about banks and insurers here looking abroad for new opportunities.
So it’s interesting to note that Simon Lee, the CEO of RSA Insurance Group plc, one of the largest insurers based in the U.K., is just as excited about the growth prospects in Canada as he is about emerging markets.
The property and casualty insurer has risen from the No. 10 spot in the Canadian market to the No. 3 spot during the last seven years, Mr. Lee noted during a discussion in the company’s new Toronto office, where he spent some time this week.
“It’s becoming an increasingly important part of the group,” which operates in more than 30 countries, Mr. Lee said of Canada. “It’s just under 20 per cent in terms of premiums. It’s a bit more in terms of profitability.”
Part of the reason Mr. Lee thinks there’s plenty of room to get bigger here stems from the acquisition opportunities. Last year the company paid $420-million to buy GCAN Insurance Company from the Ontario Teachers’ Pension Plan. And Mr. Lee thinks similar deals are lurking out there.
Many observers say Canada’s property and casualty insurance industry is ripe for consolidation. “It’s a pretty fragmented market and the top three have a market share of 25 per cent,” Mr. Lee noted.
Those top three - Intact, Aviva and RSA - are not for sale. “But then you get down to the other businesses that in the hundreds of millions of dollars of premium, like GCAN was, and that’s where I think there will probably be more consolidation,” Mr. Lee said.
RSA recently bought a couple of small businesses in Argentina, and Mr. Lee is very keen on Latin America, but he still speaks with enthusiasm about Canada. “One of the things about Canada is obviously it’s weathered the economic storm better than many countries,” he said. “It’s much easier to grow any business against a background of decent economic growth.”
There is one growth opportunity he says he’ll take a pass on - Waterloo, Ont.-based Economical Mutual Insurance Company, which is looking to demutualize. “We’re not going to be interested in Economical,” Mr. Lee said.