Broker Network posts rise in revenue after "extraordinary year"

Broker Network chief executive officer Andy Fairchild has stated that 2016 was an “extraordinary year” for the business.

The network has posted a rise in revenue to £10.27m for the year ended 31 December 2016, compared to £8.81m in 2015.

However, its pre-tax profit fell to £1.30m for the year, compared to £2.13m in 2015 and its operating profit also decreased to £1.30m (2015: £2.11m).

The firm further revealed a profit for the year of £1.15m, compared to £1.66m in 2015.

In addition, the network’s member income fell slightly to £3.38m (2015: £4.08m), while its insurance income rose to £6.89m in 2016, compared to £4.73m in the preceding year.

The firm also filed results for Countrywide Insurance Management to Companies House and revealed that revenue for 2016 remained relatively flat at £2.80m (2015: £2.73m) and a profit of £1.10m (2015: £1.03m).

Strategy
Broker Network was purchased from Towergate by HPS Investment Partners and Madison Dearborn Partners last summer.

“Our results reflect some extraordinary costs for that change and for the acquisition that we made towards the end of the year,” Fairchild told Insurance Age.

“We’re pleased with the income result and what we’ve done is invested in our forward-looking strategy.”

Fairchild further noted that the network had added 26 new members in 2016, compared to twelve in 2015 and that these brokers had brought in over £65m in gross written premium.

“We’re pleased that those joiners have come from all life stages of brokers,” he added.

Thriving
Fairchild continued: “Some are very established, some are growing and importantly a number of them are start-ups.

“Independent broking is alive and thriving and we’re playing a really important part in encouraging start-ups and supporting new entries to the independent broking market.”

Broker Network has around 600 members and the CEO noted that he expected that number to remain stable.

“We are the longest established network, we are the largest network and of course we want to make sure that being part of Broker Network has some real exclusivity to it,” he continued.

“To become a part of the network we ensure that our members pass through some really important acceptance criteria just as we always have done. That’s very important for us.”

Acquisitions
Following the change in ownership, Broker Network set out an acquisition strategy that has so far resulted in the purchases of Finch Commercial in October last year and Boyd Insurance in May this year.

“We’re being very considered and thoughtful about our acquisition strategy,” Fairchild explained.

“These are very big decisions for brokers who are deciding to sell majority stake to us and quite rightly they should be making sure that anyone they sell to has the right culture and understands their desire to maintain their entrepreneurial spirit and independence.”

He further observed that he was “very comfortable” with the two acquisitions the business has made and praised the management teams and brands of both brokers.

However, he would not be drawn to reveal any details on what is in store in terms of future acquisitions.

“These things take time and we’re going to continue to be thoughtful and considered about what we do and of course as and when the time is right we’ll make sure that we communicate that in the right way,” he commented.

Powerhouses
According to Fairchild, the network’s strategy can be split into three parts – making sure its member services are “category defining” of networks, building its regional powerhouses and launching exclusive products for its members.

“As you can imagine we’re making sure that we are consulting with and talking to our members to make sure that our product development is aligned with their wants and needs,” he added.

Fairchild also stated that the network’s managing general agent (MGA) Broker Network Underwriting had grown its gross written premium over the year and improved its retention by 3%.

“Our MGA is in good health but we think there’s more to come in terms of exclusive products for our membership under the leadership of Tim Rolfe,” he continued.

Mission
The CEO detailed that the network’s mission is to grow and support independent brokers, adding that it had launched an organic growth program for its premier members in 2016.

He also noted that he saw opportunities in continuing to build its regional powerhouses and being a “category-defining” network.

“That’s our strategy and it’s very well laid out and hopefully very well understood by the market,” he said.

Fairchild concluded: “It’s all about executing that strategy and that’s our focus for 2017 and beyond.”

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