Embed Size (px)
Citation preview
BIG INTERVIEW www.insuranceday.com | Wednesday 1 March 20174 www.insuranceday.com | Wednesday 1 March 2017 5
A capital networkThe recent stock offering represents a significant change to Brokerslink’s business model, but co-operation among its members very much remains at the core of the new company, its chief executive says
Broker network Brokerslink has undergone quite a transformation over the past three years.
According to the company’s chief executive, José Manuel Fonseca, its evolution from a network of insurance brokers operating in more than 90 countries into a profit-focused, global broking company headquartered in Switzerland was a direct response to the increasing competition and consolidation in the international insurance broking sector.
But for Fonseca, who is also the chief executive of MDS, the largest insurance broker in Portugal and the fourthlargest broker in Brazil (after Aon, Marsh and Willis), there have not been many opportunities to sit down and reflect since Brokerslink’s private stock offering in October last year.
The new company, he says, has been actively engaged in all of the activities associated with a recently incorporated enterprise. This includes consolidating its new business model and capitalising on what it achieved last year.
“We are also in the process of investing the capital we raised in October in key areas of the business: in IT, in our centralised business platform, in recruiting new people and in making our clients and the global insurance and reinsurance communities aware of the new developments around Brokerslink,” he says.
Brokerslink’s multinational
board of directors had its first meeting in London in January at the offices of broking group Ed, a Brokerslink partner. A key focus for the company in the year ahead is broadening its presence on the African continent.
“We have got quite a few gaps in our network on the African continent,” Fonseca says. “There are around 55 countries in Africa and we are currently present in about 15 of them. This compares with the Middle East, where we are present in all of the markets. So, in terms of our expansion over the next year or two, we need to make progress in Africa.”
The company is currently present in 100 countries across Europe, North America, Latin America, Asia-Pacific, the Middle East and Africa.
Expansion plansBrokerslink is also in the process of developing what Fonseca describes as an “aggressive” business plan. The main focus of the plan in 2017, he says, is to bring Brokerslink closer to the corporate risk management and re/ insurance communities, in a way it has not been previously.
“At the same time, we will continue to expand our network of brokers and insurance services companies. We will work together with our partners and our members to complete the transformation of Brokerslink,” Fonseca says.
Before the process, which began in October 2014 with the creation of a holding company, Brokerslink was a formal association of broking, risk consulting and insurance services companies based around the
José Manuel Dias da Fonseca CVJosé Manuel Dias da Fonseca is chief executive of BrokersLink. He is also chief executive of MDS, the biggest insurance broker in Portugal.
He is chairman of Apogeris, the Portuguese risk managers’ association. He was also the vice -president of the Federation of European Risk Management Associations for several years.
Before joining MDS, he played an important role in introducing bancassurance products into the Portuguese market. He also founded a pension fund management firm and was president of a Portuguese insurer.
world. Although Brokerslink’s 70 or so member companies controlled combined annual premiums and consulting fees of more than $15bn by 2014, there was no room for complacency, Fonseca says.
Indeed, the decision to set up Brokerslink as a corporation had been formally approved a year earlier at the network’s annual conference in Singapore.
“It was clear to us that, as an organisation, we needed to be more than just a defensive network which existed to protect its members’ business interests, extend their geographic reach or to help them provide a certain level of service to their clients,” he says.
The holding company, Brokerslink Management AG, represented a very different vision and business model for the network and its members, Fonseca says. The company was initially capitalised with $500,000 provided by five board members: MDS of Portugal, Crystal & Company of the US, FilhetAllard of France, Nova of China and Cooper Gay Swett & Crawford (now Ed) of the UK.
“We wanted a structure that would allow Brokerslink to organise and resource itself in such way that would enable our members to be more proactive and dynamic in terms of accessing and competing against other brokers
Rasaad JamieGlobal markets editor
for new business and to recruit new talent. In the current environment, no broker can afford to sit around and wait for business or talent to walk through the door,” he says.
Brokerslink further strengthened its financial position in October last year through an offering of stock to members in an operational company, Brokerslink AG, a process which increased the size of the company’s investor base to 55 shareholders from 40 countries.
Financial resourcesThe new corporate structure and Brokerslink’s enhanced financial resources means it is now in a position to take minority stakes in member companies and provide them with financial and other support to maintain their independence in the market and thereby “helping them to win new business by demonstrating their unique skills to their clients and to the global insurance market”.
Brokerslink, Fonseca says, is no longer a network but a company that, among other things, owns and manages a network. “We have changed the Brokerslink business model from one where a group of friends did business together to one where these friends have become more than just friends. They became investors and shareholders in this big global broking company,” he says.
“This has created a much greater sense of alignment and motivation among our members. Because when you’re a shareholder in something, your mindset changes.”
Fonseca adds: “For a number of new shareholders, this is the first time they have made such an investment. But the new structure means they have an active involvement in the development and growth of Brokerslink, as well as unique access to global business opportunities.”
This is because, he says, despite all the recent changes, cooperation among Brokerlink’s member companies very much remains at the core of the company. The idea, according to Fonseca, is to put smaller brokers that are members of Brokerslink in a position to go after bigger or international clients, or after certain types of business they could not have previously acquired or serviced on a standalone basis.
The increase in Brokerslink’s
capital and shareholder base will drive the expansion of Brokerslink’s client support services capabilities.
The new corporate structure will enable Brokerslink to generate revenue from international business and to invest in a much more focused way in its centralised members’ support services platform.
The idea behind the platform is for member companies to have access to management, product line, business development, marketing and branding resources and services, anywhere in the world. “We can make software tools available to our members to enable them to manage inter
national accounts and/or to organise information for clients in different countries or markets,” Fonseca says.
In terms of forward planning, Fonseca does not envisage a huge Brokerslink central services team. What is important, he says, is for Brokerslink to understand where the skills and the expertise inside the network are located and how best they can be leveraged for the benefit of every member.
Here, he cites the example of Brokerslink’s construction team (which is composed of specialty lines brokers from other member companies which have very strong construction practices),
Second fundraising plannedAt present Brokerslink has two kinds of members. These are partners (which are also shareholders in the company) and affiliates (which are not – as yet – shareholders). José Manuel Fonseca points out it is not mandatory for affiliates to invest in the company.
“When we organised our stock offering, one of the criteria was that we did not allow anyone with less than 18 months of mem
bership to invest,” he says. “We thought a period of 18 months was sufficient for a member to know whether they really wanted to be part of our network.”
But many members without 18 months of membership wanted to invest and Brokerslink is now in the process of organising a second round of fundraising in early 2018 to allow other affiliates to invest and become partners in the network. “Some of those who
have already invested might invest again,” Fonseca says.
At the private stock offering in October 2015, no member was allowed to invest more than SFr100,000 ($99,696) to ensure a broad investor base. The offering was priced at SFr5,000 a share, with every eligible member entitled to purchase up to 20 shares. “Without that limit, we could have raised much more capital,” Fonseca says.
According to Fonseca, Brokerslink is approached by brokers that want to join the network almost on a daily basis. The problem, he says, is Brokerslink has to say no to most of these applications. This is, typically, because it already has a partner or an affiliate in that particular country and Brokerslink’s general policy is not to have more than one member in each country. “We don’t collect brokers,” he adds. n
which works with and provides services to Brokerslink members and partners all over the world. “This is typically to help member companies with tenders for big construction projects when they need support in terms of risk management protocols, policy wordings, rating or some other aspect of the market,” Fonseca says.
Brokerslink recently established an employment benefits team along similar lines. What developments such as these demonstrate, according to Fonseca, is that Brokerslink is not only commercially focused, but it can also very efficiently channel the relevant knowledge and exper
tise to where they are needed in the network.
“One of the issues for small to mediumsized brokers is that they cannot afford to maintain a range of specialty lines practices. But inside the Brokerslink network, they can access and use that knowledge and skill. Another issue for smaller brokers is branding,” Fonseca says.
“As a member of Brokerslink, they become part of a big brand, of a large global company. Domestic brokers, for example, are suddenly transformed into international players because of access that Brokerslink gives them to business and talent in other markets.” n
Expansion‘We have got quite a few gaps in our network on the African continent. There are around 55 countries in Africa and we are currently present in about 15 of them’
Going for-profit‘It was clear to us that we needed to be more than just a defensive network which existed to protect its members’ business interests, extend their geographic reach or to help them provide a certain level of service to their clients’
Proactive approach‘In the current environment, no broker can afford to sit around and wait for business or talent to walk through the door’
Fonseca on…
