Alway at the Southern summit

Being handed a chocolate statue is not the customary way a reporter begins an interview. However, Alway is keen for it to be mentioned as it highlights the importance of Jelf's listing on the Alternative Investment Market. He says: "We were presented with this at the Institute of Performing Arts in London in September by our stockbroker JM Finn for being the best company they have dealt with in corporate life in the past 12 months."

Alway, a qualified accountant, is a member of a breed of brokers, who have started at insurers and turned to broking at the mid-point of their careers. His first job was in accountancy at an IT firm and progressed to insurance when he joined Axa Sun Life in 1991, in a commercial accounting role, supporting the intermediary division. Alway, who at one stage was managing director of the Isle of Man subsidiary at Axa, says: "I had 10 great years there. I would still be there today but there was a change of management and a mutual parting." He continues: "I knew Chris Jelf (chairman and founder of Jelf) and he invited me to do a strategic review of the business in 2000. It took eight weeks and then I presented my findings to the board and joined as chief executive in January 2001. I took a big deep breath when I left Axa, and invested a substantial sum of money in Jelf."

Alway created his chief executive role and introduced higher levels of business management to build on the broking skills at his disposal. The turnover was £4m; today the annualised forecast for the year is around £33m.

The broker, started by Christopher Jelf, a former fire inspector at the Royal, had grown through organic growth from 1989 to 2001 and was predominantly Bristol-based. There had always been a mix of healthcare, insurance and financial services.

The Alway era has been one of significant growth, including a 143% increase in earnings before interest, tax, depreciation and amortisation in 2002/2003. In 2003, it made several healthcare and insurance bolt on acquisitions, having applied for trade finance from Royal & Sun Alliance, investing in Jelf equity, which had a policy of investing in what Alway describes as "the next tier down of brokers." Alway comments: "We are eternally grateful to Brendan McManus and his team. It gave us the springboard to grow the business organically and through acquisitions." In addition to this spurt of growth, a larger plan was on the agenda, and the Jelf management concluded that the best way to achieve this was to float on the stock market. Alway says: "We wanted to remain independent but also gain access to capital to push on. Given the age profile of the 19 shareholders, in their early forties and late thirties, it was the right decision."

Alway continues: "We raised in excess of £2m at the time of flotation however we were a tiddler on the market." There was disappointment with the initial valuation, around £10.8m, though this was in part attributable to Jelf's financial services arm and the negative view in the City of this sector. Alway explains: "It's true there were some notable scandals which tainted investors' views however, we always made it clear it was core to our strategy. However, the potential for consolidation within intermediaries outweighed some of the negatives around the independent financial adviser sector."

The largest contributor to the flotation was investment firm Isis, and the advantages of the move were quickly apparent. Listing raised Jelf's profile, gave it access to capital and independence away from the venture capital or the trade sale routes. A recent issuing in March 2006 was three times over-subscribed and brought in powerhouses such as Merrill Lynch, Octopus, Unicorn and Close Brothers. Their investment, agreed at 109 or 106 pence - has now climbed to around 180 pence, something that is a heavy responsibility on Alway's shoulders. It is surprising how fast the share price has risen given its relatively low profit gains - it made £490,000 pre-tax profits in the first half of the year and is expected to make £3m for the whole year. Alway attributes this to the knowledge that Jelf is out to grow through acquisition - tripling the size of the business in 18 months, which will inevitably hamper short-term profitability.

Alway reflects: "As a sector there has been debate about floating. As a people business it has been absolutely the right decision. Clearly, we are answerable to shareholders but we set the strategy, raise the capital and then execute it." He claims: "It created a real buzz around the company and we took the opportunity of rewarding long-term employees with share options and it felt we had grown to another level. That feel good factor has been kept till today." Proof of this statement is of the 120 people in the group that have bought shares, over 50 of them are the acquired Goss's employees. He says proudly: "We have kept the shares very tight, and you wouldn't be able to buy more than 10,000 shares on the market."

Significant deal

The acquisition of Reading-based Goss in March is the most significant business deal for Jelf so far, and established it as being able to compete with the larger broking consolidators. Alway comments: "Goss was a transformational deal for us. The opportunity to take an equity stake for Michael King, chairman of Goss, was one of the aspects which swung the deal in our favour from a lot of competition." Goss will eventually change names, though Alway is relaxed about when this happens. The main sticking point is the two separate compliance regimes.

How big does Alway want to grow? "Our challenge is to retain the client focus. If you have over 500 employees the challenge is to segregate it and get the optimum size in smaller units. We want to reach £100m capitalisation and something north of £50m turnover."

This will mean growing its gross written premium in general insurance, 50% of Jelf's business, from today's £100m to between £200m and £300m, and its heathcare book, 10% of the business, from £50m to over £100m. The financial services, around £10m of fee and commission income, will grow organically and is 40% of Jelf's revenues. Surprisingly, Alway refuses to state a timetable especially as he says confidently: "Every timetable we have put forward we've beaten." Perhaps he is deliberately coy because of the expectation of the stockmarket, or perhaps because he realises how competitive acquisitions are, and the next big deal may be hard to judge.

In addition to Goss, there have been several recent broker acquisitions including Swansea-based Brian D Thomas, Kent-based Cherwell Insurance Management and the latest, Ludlow-based Hern Waters and Company.

Strategic rethink

Once Alway's target has been achieved, he says they will have another strategic rethink, perhaps an alliance with a bigger firm or a new management team.

Since the acquisition of Goss, which was in effect a reverse takeover, Alway says Jelf has "rationalised its acquisition strategy" meaning it has become more structured. Alway notes that over the past six months a large number of teams have become available on the market and says Jelf's equity model is beneficial in attracting them. There is a full time acquisition manager, Les Brewin, and a project team. Alway comments: "There have always been lots of opportunities - the challenge is to sift through them." However Jelf's chief executive ducks the question about how many he is in talks with, and whether he would be interested in acquiring successful broking neighbours, the Bristol-based Lampier Group and Somerset-based Higos but what is apparent is that further deals are imminent.

There are five business units, 400 staff and 18 locations, in southern England and southern Wales, which is where it wants to expand specifically.

He believes the private medical insurance market is set to become more profitable and more competitive, and has previously said it could become the biggest battle among brokers in the next 10 years. He says: "It is counter cyclical. There are finite resources for the provision of healthcare. The government has pumped a considerable amount of resources into the National Health Services and they have to find their resources from almost the same area as the private sector. There is an inflationary element around the provision of private healthcare. Therefore, companies are looking for more complex and diverse provision and in an intermediated world that's terrific because the more complex an offering, the more the need for good solid advice."

You can not go on forever absorbing 5% inflation - there is a more complex offering to the larger corporates." Jelf's ideal clients have between 50 to 500 employees, a turnover of £10m or more and are owner-managed. "For the past five years we have presented the group rather than one area." Overall, there are more than 10,000 corporate clients, mainly small to medium-sized enterprises with a similar number of related individual clients. Larger clients is a growth area.

About 10% of its clients take all aspect of Jelf's offerings, and Alway shows confidence in the model when he says, "If we do nothing else but talk to our existing clients we will gain good growth. We are a corporate adviser. " However, a suggestion by Chris Jelf in an interview with Professional Broking's sister title Post Magazine in April, legal and accounting is not on the agenda.

The financial services side will be grown organically. They have been stripping out duplication through an industry platform via First Software. "Given the choice between buying an IFA firm or investing in the people and the technology, I would choose the latter - that's how you run a good IFA business."

Jelf's recruitment policy is threefold. Alway says: "We have scalability within the team - a number of people who can run bigger organisations. I recruited John Harding, finance and operations director, who worked at Axa Sun Life as deputy finance director where he had dealt with the city. Phil Barton came from a sales and commercial background for a number of intermediary businesses." When asked about recruiting quality staff through acquisitions, intriguingly, he says: "You get good brokers from acquisitions but very few have the kind of corporate team we have." One business which did not meet Jelf's criteria was Goss's wholesale arm which was sold to Higos, Access Underwriting Agencies. Alway stresses that beyond acquisitions there is organic growth in employee numbers, having brought in more than 40 additions this year.

Improvement from insurers

And where can the insurers improve? "One of the biggest challenges for providers is ensuring they are focused on what the client wants rather than what the provider wants. They need to deploy the right people at the front end who can exercise influence. The difference between them is often the person who you deal with - if you have a very competent account executive who deals with Jelf then that would be the differentiator for that company. They can be articulate and good at their job - but if they have no influence, what's the point?" Surprisingly, certain insurers are moving out of Bristol, although a brief stroll around the city would reveal Axa, NFU Mutual and DAS Legal Expenses. According to Alway brokers are seeing insurers exit Bristol and transfer business to Birmingham. Meanwhile, Norwich Union and NIG have underwriters at Jelf's offices - surely a model that is set to grow.

The future is looking good and Jelf has begun the integration of its branches onto software house Acturis's system, ditching Open GI and Sectornet in the process. Alway and Jelf need to ensure the profits flood in to ensure the share price is justified and to keep Merrill Lynch and its fellow investors satisfied.

CV

2001: Group chief executive, Jelf Group

1997: Commercial director (broking), Axa Sun Life (Isle of Man)

1996: Managing director, Axa Sun Life (Isle of Man)

1995: IT strategy manager, Axa Sun Life

1991: Finance director (broking services), Axa Sun Life

1988: Sales and marketing accountant,Target Life

1984: Business accountant, BP

1979: Company accountant, Holophane Europe.