Jelf bolsters position - Mid-tier sales continue

The news that Sussex-based broker Argyll Insurance, alongside Malvern-based Clarke Roxborough Insurance, has been acquired begs the question as to whether or not there are any successful mid-tier insurance brokers that can remain independent.

Just look at Argyll, which, under the leadership of well known chairman Kevin Young, had over the years built up a formidable reputation of acquisition itself and was staunchly independent (before, that is, eventually selling out to Jelf for what could be a total consideration of some £13m).

"We have been known as more of an acquirer than a seller," said Young, "but growing the portfolio by buying businesses would mean more debt going forward. We weren't happy with venture capital either.

"So, having been chased around at the British Insurance Brokers' Association conference last year by every consolidator going, I needed to ensure that certain points were met." These, he said, included maintaining the brand, the staff and the branches, conditions that have all been met. He added that the deal also made sense from Jelf's point of view, as it provides the group with coverage in the south that it did not have previously.

"It's a great deal for us," he continued, "but my own view is that there's a worry for the medium-sized broking houses. Things are not as comfortable as they were. The big problem is that, as more consolidation happens, insurers are paying more to consolidators in commissions. You have to look at the market and ask yourself whether you want to be left behind or not."

Young added that, as part of the deal, he will be joining the board of the Purple Partnership, the network offering launched by Jelf last November. The broking buys have cemented Jelf's position as one of the most powerful broking groups in the UK. On top of its £13m total for Argyll, Jelf paid an initial consideration of £18.3m for £45m gross written premium broker Clarke Roxborough, which could rise to a total of £27m if all targets are met.

A statement from Jelf said that the acquisition of Clarke Roxborough and Argyll would increase the group's general insurance GWP from around £175m to approximately £242m. Alex Alway, group chief executive at Jelf, said: "Clarke Roxborough is a leading regional insurance broker and has a strong reputation in the market. Our corporate activity continues and the acquisitions of Clarke Roxborough and Argyll represent nearly a 40% increase in our GWP." The purchases follow Jelf's recent moves for Manchester-based Manson Insurance Group and two Devon-based insurance brokerages, Bartlett Davies Bicks of Paignton and Carter and Co. Risk Management of Newton Abbot, which were announced in January.

In a further sign that mid-tier brokers are becoming thin on the ground, £15m GWP Newport-based David Moore and Co. has been bought by Giles. The commercial broker will leave the Willis Commercial Network. Managing director David Moore said discussions had taken six months and this "took the pressure off" his management team, allowing them to run the business. Giles is on acquisition overdrive with the purchases of £10m GWP Tyne and Wear-based Elliott Garden, Orpington-based Shephard Herriot and Surrey-based Sutton Barnard. In addition, since its huge investment from Charterhouse and Bank of Scotland Corporate in March, the broker has bought Birmingham-based Midland Risk Management, Chester-based Robinson Leslie and Welsh broker DS Howell.