Rural ambitions

According to many experts, the future of the independent broker will revolve around niche insurances. If this is true, then Lycetts is already a thoroughbred. From tree surgeons, wine merchants to owners of racehorses, Lycetts has delegated authority and leading insurance expertise.

Nicholl joined Lycetts from Willis in 1973 as a new development director. Understanding the difficult commercial climate in Newcastle in the 1970s, Nicholl targeted the owners of agricultural estates. He managed to combine their many policies to save them money. Mark Liddell developed this proposition together with Nicholl and established a farm estate division. Nicholl notes that these estates, given the declining profitability of farming, have been diversifying their revenue streams creating opportunities for brokers.

Michael Lycett established the broker with the help of Lloyd's broker Wright Deen, the name evolved to Lycett, Browne-Swinburne and Douglass following a buy-out and, subsequently, Lycetts in 1994. Robin Douglass was chief executive and chairman from 1985 until 1997. He handed over the chief executive role in 1997 and then the chairmanship in 2002, when he reached 65.

During the 1990s, Lycetts developed a countryside network as a result of the farm and estate business, with the financial services and commercial insurances predominantly remaining in Newcastle.

The firm grew organically for the next 30 years through a mixture of high net worth, commercial and financial services. Around £25m of commercial business is placed through the Willis Commercial Network making it one of the largest netwrok members. In 2003, Lycetts acquired £3m gross written premium Cliverton in King's Lynn which specialises in animal trades. This joined with Lycetts existing office in the area and as Nicholl says: "We like niches." In 2005, Lycetts purchased Algarve Insurance Brokers with £12.5m GWP, which has a niche in tree surgeons and foresters.

The last and largest acquisition was in September (Professional Broking, October 2006, p6). Hamilton and Partners brought £25m GWP to the business. The broker insures race horses and breeding stock such as stallions and mares across the world. These could be involved in polo, showjumping, events and dressage. Although the acquisition is still being bedded in, with the new partners gaining shares in the business, Nicholl is pleased. He says: "This has worked extremely well and we are now cross-selling related commercial insurances such as property and liabilities to their large client base."

The latest acquisition has given Lycetts an office in Fenchurch Street and a presence within Lloyd's, whereas before the broker worked solely through service companies. Nicholl says: "We are Lloyd's coverholders and place business with insurers such as Amlin, Hiscox, QBE and Catlin." Competing with brokers such as Willis, Aon and Howard Global, Hamilton also writes international wholesale insurance.

Although Nicholl stresses his firm is still consolidating its latest acquisition, he adds they are still looking for targeted acquisitions that fit into their culture and niche. London-based Resolution Partners are its advisers.

In the last fiscal year, ending April, Lycett's revenues were £9.8m with a profit of £1.5m. Despite turning 60 soon, and owning 15% of the business, Nicholl is determined for the firm to remain independent. He says: "I am the largest shareholder with 15% of the shares and we have grown thus far without borrowing anything."

Nicholl will not be far away, overseeing the business as chairman, although he recognises the importance of giving the new CEO autonomy.

Commenting on the soft market, Nicholl says: "It is a crazy market at the moment, when insurers start competing heavily on high risk liability insurance. In 2001, rates went through the roof and the same cycle happens every time." The current state of the market makes consolidation and excelling in niche business lines increasingly important. Lycetts is well placed to continue doing favourably in both.

LYCETTS

Chairman and chief executive: Edward Nicholl
Established: 1961
Number of offices: 12
Locations: Newcastle, Aberdeen, Edinburgh, Exeter, London, Oxford, Shropshire, King's Lynn, County Kildare, Woking, Storrington and Newmarket
Number of staff: 160
Main lines of business: Commercial, bloodstock and high net worth
Gross premium income: £75m.