[Report] UK Consolidation Commercial Broker Market Research, Trends, Analysis TOC

CHAPTER 1 EXECUTIVE SUMMARY
- The fragmented nature of the broker market, the age profile of many principals, venture capital and more recently FSA regulation have combined to create the consolidation in the broking sector
- There are a number of consolidators aiming to increase their market share of commercial lines distribution
  - Towergate Partnership operates a hub and spoke strategy to acquisition
  - The Broker Network was founded in 1994 and currently controls £450 million in GWP
  - COBRA was formed in 2003 and aimed to buy ten insurance firms in 2006 as part of the Group' s longer term aim of controlling £600 million in GWP
  - Oval Insurance is a consolidator that controls approximately £280 million in GWP and is backed by Caledonian Investments
  - Smart & Cook was founded in 1968 and now controls approximately £200 million in GWP
  - Layton Blackham has a fully integrated business model and controlled £150 million in GWP before its acquisition by AXA
  - Giles Insurance Brokers plans to increase premiums to £250 million by 2009
  - Jelf aims to become the dominant commercial lines broker in the South of England and Wales
  - Vega Insurance Services is part of Bermuda based Primary Group, and aims to control £100 milion in GWP
- Consolidation is set to continue
  - Strong consolidation among brokers will continue
- Banks or large insurers may continue the recent spree and buy into the consolidators, potentially increasing their share of the commercial market
  - A larger consolidator may buy some of the smaller consolidators thereby reducing the number of consolidators in the market
  - A bank might buy a consolidator
  - Large insurance companies may continue to buy into consolidators giving the insurers increased market share, particularly in commercial lines
CHAPTER 2 INTRODUCTION
- What is this report about?
- Who is the target reader?
- How to use this report
CHAPTER 3 MARKET DYNAMICS
- Introduction
- The fragmented nature of the broker market, the age profile of many principals, venture capital and more recently FSA regulation have combined to create the consolidation in the broking sector
  - The broker market is fragmented
  - Venture capitalists and investors see strong commercial opportunity in consolidating a number of brokers
  - Many principals are nearing retirement age
  - The costs and administration requirements of FSA regulation have provided a further driver for consolidation
- A handful of consolidators exist but they are having a big effect on the distribution dynamic in commercial lines
  - The consolidators are having an impact on the distribution of commercial insurance
  - There are a handful of key consolidators
- The corporate strategies of the consolidators contain a number of similarities
CHAPTER 4 CONSOLIDATOR PROFILES
- Introduction
- Towergate Partnership operates a hub and spoke strategy to acquisition and aims to control £3 billion in GWP by the end of 2007
  - Towergate Partnership offers both specialist underwriting and broking services
    - Towergate Partnership dates back to 1997
    - Towergate Partnership re-financed in 2006 raising further funds for expansion
    - The Towergate Partnership is comprised of two divisions: Towergate Risk Solutions and Towergate Underwriting
  - Towergate Risk Solutions' acquisition strategy comprises its hub and spoke regional broker model and its scheme broker business
    - Towergate Risk Solutions operates a hub and spoke strategy
    - Towergate has begun to consolidate the consolidators
  - Towergate Underwriting focuses on acquiring scheme related brokers
  - Towergate has a target of controlling £3 billion in GWP by December 2007
- The Broker Network was founded in 1994 and currently controls £450 million in GWP
  - Broker Network was founded in 1994
  - Broker Network began acquiring brokers in 2004
  - Broker Network aims to control £750 million in GWP
- COBRA was formed in 2003 and aimed to buy ten insurance firms in 2006 as part of the Group' s longer term aim of controlling £600 million in GWP
  - COBRA was established in 2003
  - COBRA began its acquisition strategy in 2005 and intended to buy ten brokerage firms in 2006
  - COBRA also plans to incresase the size of its network and its underwriting agency
- Oval Insurance is a consolidator that controls approximately £280 million in GWP and is backed by Caledonian Investments
  - Oval Insurance is a consolidator that was established in 2003
  - Oval is backed by private equity company Caledonian Investments and has recently secured further funding to make more acquisitions in 2006
  - Oval has so far acquired 14 regional commercial brokers, including one Lloyd' s broker, and aims to be a national broker with a European presence controlling £1 billion in GWP by 2010
    - Oval has focused on creating a strong presence in the Midlands
    - Oval has also got its foot in the door at Lloyd' s through the acquisition of Lochain Patrick
    - Oval aims to be a large national broker with a European presence
- Smart & Cook was founded in 1968 and now controls approximately £200 million in GWP
  - Smart & Cook was founded in Knaresborough in 1968
  - Smart & Cook has made approximately 50 acquisitions and controls over £200 million in GWP
  - Smart & Cook aims to grow premium income by approximately £40 million per year and it is likely that the company will be sold within three to seven years time
- Layton Blackham has a fully integrated business model and controlled £150 million in GWP before its acquisition by AXA
  - Layton Blackham was established in 1984 by Chris Blackham
  - Layton Blackham has a fully integrated business model
  - Layton Blackham currently controls £150 million in GWP
  - Layton Blackham was acquired by AXA in January 2007
- Giles Insurance Brokers plans to increase premiums to £250 million by 2009
  - Giles is an insurance broker based in Glasgow
  - Giles plans to double its premium income by 2009
- Jelf aims to become the dominant commercial lines broker in the South of England and Wales
  - Jelf offers a range of services to business
  - Jelf is enhancing the talent within its organisation
  - Jelf aims to become the dominant commercial insurance broker, corporate healthcare and employee benefits provider in the South of England and Wales
- Vega Insurance Services is part of Bermuda based Primary Group, and aims to control £100 milion in GWP
  - Vega Insurance Services is part of the Primary Group, a Bermudan based insurance organisation
  - Vega aims to control £100 million in GWP
CHAPTER 5 FUTURE DECODED
- Introduction
- Consolidation is set to continue, with the profiled brokerages potentially controlling 14 per cent of the entire UK market in the future
  - Strong consolidation among brokers will continue
  - Consolidators may control up to 14 per cent of the total UK insurance market
- Banks or large insurers may continue the recent spree and buy into the consolidators, potentially increasing their share of the commercial market
  - A larger consolidator may buy some of the smaller consolidators thereby reducing the number of consolidators in the market
  - A bank might buy a consolidator
  - Large insurance companies may continue to buy into consolidators giving the insurers increased market share, particularly in commercial lines
    - Panel insurers might be concerned if an acquiring insurer were to transfer panel business to its own book
    - There may be an opportunity to transfer some panel business to an acquiring insurer' s direct business
    - An acquiring insurer would also have to consider the cost of transferring panel business to its own book and the likely conversion rate
  - Consolidation will continue and could lead to some large scale changes in the industry
CHAPTER 6 APPENDIX
- Definitions
  - Definitions of general terms
- Research methodology
- Current readings
- Future readings
- SPP writing team
- List of Tables
  - Table 1: Towergate Partnership' s last ten major acquisitions, 2005-6
  - Table 2: Acquisitions made by Broker Network, 2004-6
  - Table 3: List of Oval Group acquisitions, 2003-6
  - Table 4: Selected list of acquisitions by Smart & Cook
  - Table 5: Jelf Group insurance acquisitions, 2002-6
  - Table 6: Vega Insurance' s acquisitions 2004-6
  - Table 7: Market share of consolidators and projected growth to 2010f
- List of Figures
  - Figure 1: FSA regulation is a significant cost for many brokers
  - Figure 2: A number of factors are driving consolidation in the broker market
  - Figure 3: There are a number of consolidators in the UK of differing sizes
  - Figure 4: The Towergate Partnership is comprised of two divisions Towergate Underwriting and Towergate Risk Solutions
  - Figure 5: The Towergate Partnership' s target is to reach £3 billion in GWP by December 2007
  - Figure 6: COBRA Holdings is comprised of six businesses
  - Figure 7: COBRA plans to control £600 million GWP by 2011
  - Figure 8: Oval intends to build its business to control £1 billion in GWP by 2010
  - Figure 9: Layton Blackham' s insurance services
  - Figure 10: Vega' s stated target is to reach £100 million in GWP
  - Figure 11: The consolidators would control nearly 14 per cent of the UK insurance market by 2010, if they meet their growth plans

Consolidation in the UK Commercial Broker Market

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