After Sun Life Financial’s announcement that it will acquire Maxwell Health, benefit brokerages and advisory firms that serve small and midsize employers might be on the lookout for similar deals.

Expect more M&A attempts by insurance carriers to become more vertically integrated, says Jack Kwicien, a registered investment adviser and managing partner at Daymark Advisors, LLC, as well as an EBA columnist.

He says those opportunities largely involve the use of technology and synergistic product categories. Others include controlling as much of the distribution and interaction with employers. The ultimate aim is to improve employee engagement through more user-friendly experiences.

Maxwell Health’s platform allows corporate customers to enroll employees in all of their benefits, including medical, dental, vision, life, short- and long-term disability, voluntary coverages, financial benefits such as health savings accounts, and lifestyle products such as telemedicine.

The platform integrates with carriers, payroll systems and other third-party administrators. A mobile app for users includes virtual insurance ID cards and access to support for health and benefits-related questions. Founded in 2012, Boston-based Maxwell Health and its 125 employees will continue to operate independently. Terms of the acquisition announced on June 4 were not disclosed.

See also: With its 500th brokerage purchase, HUB International eyes firms in Canada

Being paired with “a well-capitalized, robust parent company” could help Maxwell Health expand and grow, says Tim Cunningham, founder of OPTIS Partners, a market research firm that tracks mergers and acquisitions in the insurance and brokerage space.

As for Sun Life, he believes the motivation was to broaden its benefits portfolio with a burgeoning market opportunity. “We know the world that Maxwell Health operates in, and it’s a good investment,” he adds.

One caveat is that when carriers control a benefits platform, Kwicien warns that it limits the availability of products. So an employer hoping to pursue a best-in-class approach to choosing benefits might find that four or five product offerings from multiple sources aren’t a good fit.

“The larger question becomes is Sun Life going to allow an adviser to integrate non-Sun Life products into the Maxwell Health platform,” he says. “The flip side of that is if you’re another carrier, are you going to want your products being marketed through the platform of a competitor?”

Kwicien sees synergies in the pairing. For example, Sun Life has invested in Maxwell Health since 2015 and used the company as a provider on its digital benefits marketplace with life, disability and other insurance offerings. He says it also was already privy to market data on how the company’s platform is being used for its small and midsize employer target market, as well as the adoption rate.

“They must be getting some sales results that they feel are satisfactory,” according to Kwicien. “Otherwise, they wouldn’t have gone to the time and expense of wanting to have that as a proprietary platform.”

He also sees Maxwell Health at a crossroads following a growth spurt and several rounds of financing, noting a need to “feed the beast in terms of deal flow.” An unnamed source describes the deal as “a head-scratcher,” believing the Toronto-based international financial services organization isn’t very active in the employee benefits area.

However, the insurer describes itself as one of the largest group benefits providers in the U.S., serving more than 60,000 small, medium and large workplaces. Sun Life’s portfolio includes disability, absence management, life, dental, vision, voluntary and stop-loss insurance.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access