This article appears in the February 2023 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Nearly a decade after overseeing one of Canada’s biggest insurance carrier mergers, Denis Dubois is now leading the integration of a $750-million deal expected to more than triple Desjardins Group’s head count of independent wealth and life insurance advisors.
By March 31, Lévis, Que.-based Desjardins Group expects to close the purchase of three Guardian Capital Group Ltd. subsidiaries: Worldsource Securities Inc., mutual fund dealer Worldsource Financial Management Inc. and life insurance managing general agency (MGA) IDC Worldsource Insurance Network Inc. (IDC).
Worldsource “was already a sizable operation,” with assets under administration (AUA) of about $23 billion as of June 30, 2022, compared with about $20 billion for Desjardins, said Dubois, executive vice-president, wealth management and life and health insurance, with Desjardins Group and president and chief operating officer of Desjardins Financial Security.
The Worldsource deal will bring Desjardins Group’s independent life insurance and wealth management advisor roster to 7,000 from about 2,000 (not including the wealth and life sales forces with the caisses or Desjardins Securities), Dubois said. The combined AUA of $43 billion in mutual funds, segregated funds and securities will put Desjardins sixth among non-bank mutual fund dealers in Canada, according to data from Investor Economics.
New life insurance sales in 2021 were $40 million at Desjardins, compared with $220 million at IDC, Dubois said. That meant IDC was the No. 1 MGA in terms of new sales, with 2021 an “exceptional year for IDC,” he said. IDC’s new sales for 2022 are expected to come in around $170 million.
Before Desjardins Group appointed Dubois in 2019 to lead and accelerate growth in the wealth and life side of the business, he was executive vice-president of property and casualty (P&C) insurance with Desjardins Group and president and chief operating officer of Desjardins General Insurance Group for three years.
Dubois also led negotiations with Bloomington, Ill.-based State Farm Mutual Automobile Insurance Co. before Desjardins acquired State Farm’s Canadian mutual fund, loan, living benefits and P&C operations, and led the integration after that deal closed in 2015.
“When you do an acquisition, you need to start with a very strong strategic direction for why you want to do the transaction, so you need to think this through before — not during or after,” Dubois said. “That was very clear for us back in the days with State Farm.”
That acquisition “allowed Desjardins to move from the middle of the pack and become one of the three largest P&C insurers in Canada,” Dubois said. After consolidating State Farm’s operations, Desjardins Group moved to third place (with $3.32 billion in net premiums written in 2016) from seventh (with $2.2 billion in net premiums written in 2014), according to Canadian Underwriter (sister publication to Investment Executive).
By 2019, Desjardins phased out the State Farm brand in Canada, so the acquired agencies now use the Desjardins moniker.
The Worldsource deal differs from the State Farm one: rather than aiming to bring Worldsource advisors “within the culture of Desjardins,” Dubois said the three Worldsource subsidiaries will be managed as standalone entities. However, the current deal is similar in that Desjardins wants to be “a leader within the independent distribution” of investments, mutual funds and life insurance and to expand its presence across the country.
Worldsource advisors have a “very strong entrepreneurial culture” and “great” performance over the past 15 years, Dubois said. “We want to keep that and just provide the support they need,” which could include financial resources for cybersecurity expertise, as well as for acquisitions of more advisory teams and support businesses.
Desjardins does not forecast any advisor attrition from the merger. “With the support of a larger organization that also understands the business, there’s really no reason for people to leave at this point,” Dubois said. “This is not like what you would see with other deals, where you see massive synergies through the process. The intent is to build more around growth than synergies.”
Desjardins Group offers both private wealth and a full-service brokerage to high-net-worth clients, plus wealth management for mass-affluent clients, said Nader Guirguis, VP of wealth management strategic development with Desjardins Wealth Management.
But Desjardins “had very little presence” outside Quebec in wealth distribution, Dubois said, so the Worldsource deal “is a way for us to reach out to more Canadians.”
Desjardins Group declined to share its specific goals for AUA and the number of advisory teams as a result of the Worldsource acquisition. However, Dubois said Worldsource’s “track record [of] organic and non-organic growth” is one reason Desjardins Group agreed to buy the three subsidiaries and that Desjardins Group wants “to maintain that growth.”
Desjardins Group is actively looking to acquire more independent advisory companies — and perhaps more MGAs.
Worldsource “boasts significant experience and expertise in mergers and acquisitions,” Dubois said. “This is not the end of it for us. We see future growth clearly within [the Worldsource] businesses down the road.”
Born and raised in Rouyn-Noranda, Que., Dubois, 51, worked for most of his career in P&C insurance. He attended Université Laval, graduating in 1993 with a bachelor’s degree in actuarial science, and spent the next 10 years working for P&C insurers before joining Desjardins Group in 2003.
“I took all kinds of roles in claims, business development and operations,” Dubois said. “I really went looking at every aspect of the business, but most of what I did was around generating profitable growth.”
In addition to overseeing thousands of wealth and insurance employees, and supporting product distribution through the caisse and other networks, Dubois also serves on the boards of the Centre de développement en assurances et services financiers, the International Cooperative and Mutual Insurance Federation and Aviso Wealth Inc. (which is half owned by Desjardins Group).