Oracle RMS to use Abry Partners investment to support organic and strategic M&A strategy

(The Insurer) - Oracle Insurance Risk Management Services (Oracle RMS) will use its newly secured strategic investment from Abry Partners to supercharge its organic growth strategy, with the Canadian broker also open to select strategic M&A deals.

Earlier in July, commercial and personal lines-focused broker Oracle RMS announced that private equity firm Abry Partners had bought into the business.

Founded in 2011 by CEO John Ferraro and president Michael Di Nardo, Oracle RMS has grown into one of Canada’s largest independent brokers.

Following the financial tie-up, Oracle RMS’s leadership team will continue to hold significant equity ownership in the business and will remain at the Vaughan, Ontario-based company’s helm.

Talking to The Insurer, Ferraro said Oracle RMS is “about 50% commercial, 50% personal lines.” There is crossover between the two, with Oracle RMS often placing a businessowner’s personal lines protections along with their company’s commercial coverages.

Ferraro said Oracle RMS’s “sweet spot is playing in the SME space and middle market,” with clients operating across a multitude of industries, including infrastructure, manufacturing, wholesale and medical.

In the 14 years since launch, Oracle RMS has grown to almost 400 staff who work across nearly 40 branches, all of which are within its native Ontario.

ADDITIONAL INVESTMENT WAS NEEDED

As Ferraro explained, he and Di Nardo realized last year that Oracle RMS would need additional investment if they wanted to maintain its growth momentum.

“That's when we decided to look for a private equity partner so that we can compete with some of the larger firms out there that are been doing a lot of the consolidation,” Ferraro said.

“We feel we have a lot of opportunity in that space, but we just couldn't play even unless we had the right financial partner.”

That is where Abry Partners stepped in. Boston-based Abry Partners focuses on the middle-market segment and has invested in several retail brokerage platforms in the U.S., along with underwriting platforms.

Abry Partners’ current investments include U.S. retailer High Street Partners and London-based (re)insurer IQUW, while in the past it has backed Acrisure, Confie, Hilb Group, Innovisk Capital Partners, NSM Insurance Group and Socius.

“Ultimately, working now with Abry gives us an opportunity to leverage their knowledge and their skills through their experience of running successful brokers in the U.S., and bring that knowledge and that know-how to Canada,” said Di Nardo.

“Together, we feel very confident and excited that we can take Oracle to the next level, and ultimately, by adding all this extra know-how, it gives us more tools for our producers and for our in-house staff to succeed and also attract new producers, attract new branches, attract new brokerages. So it's exciting stuff,” Di Nardo added.

ABRY SPIES CANADIAN OPPORTUNITIES

Abry Partners principal David Coneway said the Oracle RMS investment came about after the PE firm had evaluated various opportunities in Canada.

“The Canadian market had been one that we had spent a lot of time in and about over the last probably more than half a decade,” Coneway said.

Abry Partners’ insurance investments to date have largely been focused on the U.S., and Coneway said Canada “was a high priority geography we identified on the broker side”.

“We think it's a really interesting market. There's some nuances to it. It's got a lot of the same characteristics that we like in the U.S., but it's a very healthy, growing market, particularly on the commercial side.”

In some ways, brokers play an even more important role in the Canadian market than in the U.S., Coneway said.

“Just given the landscape, particularly as far as certain lines of business and in the trust that insurance markets have in brokers to make sure that they're not just acting as a sales and distribution channel, but also as a partner to ensure that they are getting the premium and the risk that they're looking for,” he said.

A NEXT GENERATION BROKER

Wanting to make a move into Canada is one thing. Finding the right partner and actually doing so is another.

When Abry Partners was introduced to Oracle RMS, Coneway said the broker’s “excellent” identity and reputation appealed to them, along with its impressive organic growth.

“But really, what we took away is that they had really hit this deep vein with this culture, that they had been able to establish the business where they provided an environment for the entrepreneurial producer to really thrive and build their book in an environment that allowed them to really succeed," he said.

“That was a major reason why we saw the type of growth that we did in business, and it's something that we look to continue to re-emphasize.”

Coneway said Oracle is “going to be part of the next generation of brokerage platforms.”

Abry Partners has experience supporting brokers whose focus is on acquisition roll ups. However, that business model is evolving, and Coneway said there is more a focus on delivering a sustainable higher-than-market organic growth rate.

At the same time, the new model of brokers will see companies taking data and not just making management decisions based on it, but also putting it in the hands of producers to make their jobs easier.

“That's something that's going to be a key focus of what we view as the next frontier of retail brokerage,” said Coneway.

ONTARIO FOCUS

While Ferraro said Oracle RMS has ambitions to grow its business nationally, having gotten the financial support of Abry Partners, the company remains focused on building out its footprint in its native Ontario.

“There’s still a big opportunity in Ontario, it being the largest province, so obviously we want to try to focus and capitalize as much as we can (there),” Ferraro said.

“As we grow, we’re looking to attract new clients, and we want to be able to service these clients properly if they’re national accounts,” added Di Nardo.

And while Di Nardo acknowledged that neighbouring Quebec is also a very large market that holds potential for Oracle RMS, the current focus remains on Ontario.

“(We want to) get a good stronghold in Ontario, and ultimately grow it from there,” said Di Nardo.

Nathan Ott, a partner at Abry Partners, said Oracle RMS is well positioned to take advantage of some of the frustrations that have arisen among workforces at certain brokers.

“One of the symptoms of the consolidation over the past 10 years is a group of producers that have become disenfranchised. From our perspective, Oracle is a wonderful home for those producers, and it’s going to be an engine for growth,” Ott said.