Joint financing program to be made available to buyers of qualifying brokerages currently representing Farm Mutual Reinsurance Plan members
Cambridge and Toronto, Ontario March 18, 2008: The growing number of insurance brokerage owners approaching retirement age combined with the growing interest by various parties in owning insurance brokerages has fueled demand for buyout financing. In response to this growing need, Farm Mutual Reinsurance Plan Inc. (FMRP) and BMO Bank of Montreal have launched a joint financing program designed to assist with the perpetuation of independent insurance brokerages.
According to a 2007 survey conducted by the professional services firm, Cookson Walker Consulting, 37% of privately owned brokerages are expected to exit their business by 2012. In Ontario alone this would translate into 300 brokerages changing ownership worth over $900 million at today�s prices. As owners seek viable exit options and brokerage prices have increased, buyers are increasingly seeking creative financing solutions.
�Assisting with the perpetuation of the insurance brokerage channel is a natural extension of our collective strength through co-operation we provide to our Farm Mutual members,� says Steve Smith, CEO of FMRP. �The perpetuation of the independent insurance brokerage channel is integral to the success of many of our members and we welcome the opportunity to play a role.�
Through this offer, FMRP is utilizing its financial strength to assist with creative financing structures for brokerage buyers in conjunction with BMO Bank of Montreal. BMO Bank of Montreal has been a long time financial services provider to insurance brokerages and will offer buyout financing to qualifying brokerage buyers, either individuals seeking the goal of ownership or brokerages looking to expand via acquisitions. To qualify for consideration under this program, a brokerage will have to be recommended by a Farm Mutual insurance company that they are currently representing.
“FMRP and BMO Bank of Montreal have been longstanding supporters of independent insurance brokerages,” said Randy Carroll, CEO of the Insurance Brokers Association of Ontario (IBAO). “This joint offering is a welcome addition to others who are also assisting in the perpetuation of the independent insurance broker channel.”
�IBAO was the catalyst for this offering�, said John Knotek, Manager, BMO Bank of Montreal. �They recognized the potential for FMRP and BMO Bank of Montreal to work together in supporting brokerage perpetuation while keeping a brokerage�s business relationship with a farm mutual separate from their financing relationship.�
FMRP is the reinsurance arm of 60 regional Mutual Insurers operating in rural areas Canada-wide, and in so doing enables its members to participate on an equal footing with much larger players in the insurance industry. FRMP also acts as a group representative on government and industry issues, providing members with a unified and powerful voice on issues affecting them. FMRP and its members have long formed integral roles in the communities that they serve.
BMO Bank of Montreal has maintained a longstanding specialized financial services program for property and casualty insurance brokers. Over the last ten years BMO Bank of Montreal has grown its market share to become the top bank for property and casualty insurance brokers in Canada, having assisted many brokerage buyers reach their ownership aspirations.