JEP Business Review Supplement – 17th March 2010

Acquisitions on Insurance Agenda by Gary Boon, Head of Office, CCV Jersey

The word ‘Insurance’ may conjure an image of risk-averse people in grey suits; however when Insurance luminary and Towergate and CCV Risk Solutions Executive Chairman, Peter Cullum, talks acquisition, people listen. When he first sat down with colleagues in 1997 to plan the creation of insurance intermediary Towergate, it was clear that acquisition was central to his strategy; he has since overseen the buy-out of more than 200 companies in both organisations

Relatively speaking, like the rest of the market, acquisitions took a backseat at both Towergate and CCV in the last twelve months, but now as the economy is showing tentative signs of recovery, acquisitions are firmly back on the agenda.

Ready to Move

Some UK operators are saying they will make 10 to 15 acquisitions each year for the next three years, giving an indication of how serious they are; others remain cautious with a view to gradually increasing activity towards the end of the year assuming the economy does not take a double-dip.

Certainly prices will be more realistic, and whilst deals may take longer to complete, there is no doubt that organisations like CCV are very much on the look-out for the right acquisitions and the growth opportunities they may bring.

And so, as we find ourselves on the verge of what could be the end of the recent economic crisis, it in itself appears to have been a catalyst for the insurance sector.

Insurance companies have taken the opportunity to look at their balance sheets to see how profitable they in fact are; they have also been looking at who they do business with, and at how they are going to keep both their clients and their shareholders happy.

In the insurance broking sector, mergers and acquisitions have been happening, but at a slower rate to pre-2008 activity. As with the insurers, most brokers have been looking at who they are doing business with and most importantly how; could electronic trading in commercial lines business through the Towergate platform be the new way forward or are niche products and bespoke service the way to go?

It has always been said that economies and organisations need to invest their way out of the economic down times. Now, as the market appears to be pulling itself back on track, Insurance Groups, such as our own, are looking to grow through acquisition, which of course can be beneficial to the Jersey economy on a number of levels.

Benefits for Jersey

As prices settle at a more realistic level, if you are on the acquisition trail clearly there are some good deals to be done; on the other hand, there are opportunities on the table for the principals and senior operators if the time is right to liquidate their assets, either by selling or considering a move to a company on the up.

It is also of course beneficial for the clients if the coming together of two Insurance brokers brings additional expertise and services to that previously enjoyed with only one part of the offering.

Our own Group Chief Executive, Michael Rea, is certainly of the belief that there are plenty of opportunities to buy as individual brokers look to sell. We saw several acquisitions by the CCV Group in the UK market during 2009 and the first this year took place in January.

This confidence has now reached the Jersey shores, where we are keen to expand our ‘footprint’ either by taking on additional insurance qualified staff, who may have a book of clients to bring with them, or through the acquisition of an existing, or several, insurance broking businesses, specialising in general insurance services. Businesses with a mix of general and financial services may also be considered.

The deals can take the form of either a ‘partial’ ownership, where the exiting owners sell part of the business, with the rest being sold at an agreed value at a later date; or we would look at full purchase, where the owners and staff join the CCV Group of companies.

For CCV Jersey, an acquisition would accelerate its growth aims, but a mix of new Account Executives, together with one or more acquisitions would be ‘ideal’ and would take the business to where it wants to be; a well known and respected company in the local community, and a highly prized business within the CCV Group.

Incentives to Match Experience

Cullum Capital Ventures Ltd, our UK parent company, has recently introduced a series of incentives to enable its local businesses to recruit additional Account Executives, even providing financial assistance where the successful Account Executive is unable to deal with his/her clients for a given period due to contractual restrictions. It’s all about looking to the future rather than the short term.

In the local market, the number of qualified commercial insurance staff is limited, however, CCV Jersey is looking to become involved in a new initiative where individuals from other sectors are looking to re-train and develop new skills. For CCV Jersey this may involve employing and re-training a person who has skills in the finance sector, but little or no specific insurance related skills.

Utilising training applications designed by the Chartered Insurance Institute (CII) and the British Insurance Brokers Association (BIBA), technical insurance skills can be learned and when coupled with existing skills and experience, this can be a valuable, untapped resource for local companies.

A Long Way in a Few Short Years

Like so many Insurance businesses, CCV Jersey has come a long way in just a few short years, the end result of a number of mergers and acquisitions within the Channel Islands and London Insurance sectors. We may have enjoyed a colourful history of owners and brand names, although during this time we have managed to steer a steady course in terms of our team, and the clients we serve.

We certainly have a very positive attitude about the Jersey market – yes, as an economy we have seen redundancies and the Island may feel the effect of these for some time to come – but here at CCV Jersey we see some extremely encouraging initiatives coming from our client organisations. Jersey is known for its resilience and innovation in the face of adversity and we have no doubt that the Island will continue to flourish.

Ends.

Notes for Editors:

CCV Jersey is the trading name of CCV Risk Solutions Ltd, registered in England and authorised and regulated by the Financial Services Authority in the UK and Authorised by the Jersey Financial Services Commission to conduct insurance mediation business for clients in Jersey.

CCV Risk Solutions Ltd is a wholly owned subsidiary of Cullum Capital Ventures Ltd and is part of the CCV Group.