Brokers hail end to Groupama 'limbo' period

Groupama has been up for sale since January 2012, and it was confirmed today that both businesses have begun exclusive discussions over a purchase deal, which would exclude Groupama’s UK broking operations.

Howard Lickens, CEO at Clear Insurance Management, said the announcement was “very overdue”. He stated: “I have no idea why Groupama seem to have been in limbo for such a long time.”

He described it as a positive move as Ageas are an “up and coming firm”, and continued: “The owners put [Groupama] in a completely untenable position, and some resolution is needed.

“Hopefully this will be sorted out and the uncertainty will go, it makes sense if they can get it finalised.”

Entrepreneurial spirit
Ian Gosden, managing director at Higos Insurance Services, said that, although the broker does not do a lot of business with Groupama, they viewed the news as being “good for us as a business” as it will be a boost for Ageas. “It will change the dynamic because Ageas will move up to the bigger players’ level," he said.

Mr Gosden stated that brokers working with Groupama should be relieved rather than worried about the deal, and cited the “entrepreneurial spirit” of Ageas UK chiefs Barry Smith, CEO, and Mark Cliff, managing director, giving the examples of the insurers recent deals with Tesco Bank and Kwik Fit Financial Services.

He added: “They are also one of the few underwriters who are really helping us to write business that can compete with personal lines aggregators – they really listen to us.”

“We will be very pleased to see it happen,” he stressed. “It takes the uncertainty out of things for brokers working with Groupama, and it certainly gives Barry and Mark more clout in the industry.”

Interesting fit
And Paul Thorniley, group binder manager at Lorica, was adamant that a proposed sale would lead to a better result compared to selling Groupama's UK business to a venture capital firm.

He explained that it would lead to an improved outcome for the market as opposed to seeing the business sold again in three years' time.

And he said that a potential agreement between Ageas and Groupama would be "an interesting fit".

"Groupama is profitable and has a good operating ratio, I think their [Ageas and Groupama] risk appetite is similar," he assessed. "They both do follow quite similar models - certainly on the open market business side."

He added that Ageas would also benefit from Groupama's expertise in terms of business transacted on a delegated authority basis, as well as from its e-trading offerings.

Good access
Furthermore, Clive Galbraith, chairman of Green Insurance Group, stressed the potential benefits of the deal and said today's announcement wouldn't cause "too many brokers to race off for their worry beads".

He said: "Ageas have really reinvented themselves and expanded over the last two or three years - it will give them good access and it is something they can make work. I think they will do a good job of it.

"Ageas is a good broker company and I would say a lot of what Groupama does fits quite well with Ageas in terms of their retail area."

Meanwhile, Graham Whyatt, divisional director of James Hallam, said he was not surprised by this morning's announcement.

But he said that, since Groupama's downgrade by Standard & Poor's in June, the broker had transferred business away from the insurer, meaning any potential sale would have a minimal impact.

"Everyone knows they have been in trouble," he explained. "I don't think anyone will be too suprised."

"It won't have a major, major impact on us as a broker. [And] a broker with a decent reputation would have been in the same boat and moved their business away."

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