Paul Moors - Back to basics

Bollington is a gem of a town complete with canals, mills, pubs, hills and fields. Situated half-an-hour outside Manchester on the outskirts of Macclesfield, its most famous landmark is the White Nancy, a large white stone at the summit of Kerridge Hill built to commemorate the Battle of Waterloo; the stone is the inspiration behind the broker's logo. Bollington was formerly a strong, cotton milling area served by trains and canals. Three mills are still in operation, though none make cotton any more and the canals are more for pleasure rather than work.

It is strange to think that this sleepy town of less than 10,000 people has been the epicentre of one of the most well known brokers in the UK - at least, well known to those in the profession. The distance from Manchester has perhaps helped Bollington differentiate itself as a more truly a regional broker than some of its centrally based rivals, one that is perhaps more aware of the opportunities present in small communities.

When I arrive, I am ushered upstairs to find chief executive Stephen Wall and chairman Paul Moors sitting in two offices, side by side and with plenty of space for them to meet and greet guests, though the number of insurance high-fliers that venture as far as Bollington is presumably small. Wall and Moors look as relaxed and chirpy as ever; if you know them well, essentially exactly as they always are.

Security

Perhaps partly, at least subconsciously, they are in good fettle because, in these troubled economic times, they have the support and backing of one of the largest mutuals in Europe; Paris-based Groupama took a 60% stake in the business in June 2007 at a time when there seemed to be a broker acquisition or partial acquisition every other day. The market for broker acquisitions had heated considerably and it is likely to have obtained a healthy price for that stake in the broker. Paris and Bollington? Two words not often written on the same page.

The deal came after the dynamic duo were interviewed in January 2007's edition of PB. Then, Moors said: "There's no pressing urgency to decide any options for the future at the moment. We review all options constantly." It would seem that the review process was put into hyperdrive when Groupama (technically, the broker reports to Groupama SA, the parent company) came in with its offer and plans.

In November 2007, Pierre Lefevre - the former chief executive of Groupama - explained the decision to buy into the distribution chain to PB: "The market is changing rapidly, a large proportion of which over the past three years has been consolidation. Some key relationships such as Hill House Hammond have disappeared. We decided to be more involved in distribution, which is becoming more important in the value chain." Groupama's management was also keen to insist that this was not a reaction to Axa's purchases of the likes of Stuart Alexander, Smart and Cook and Layton Blackham. Axa decided to bring its brokers together under the Venture Preference moniker, whereas Groupama has kept its commercial buys - Bollington and Lark - separate, showing a markedly different strategy.

As regards why the senior management team at Bollington embraced the deal and what has changed, Moors says: "Before, we were using borrowed money and transactional short-term funding with the banks reacting very slowly. We couldn't move quickly if we needed to buy. Now, we have no borrowings or overdraft and can take advantage of a hardening market." Despite this assertion, the broker has completed only two acquisitions since Groupama's involvement, those of wholesaler Compucar and Manchester-based commercial broker Greystone Insurance Services.

Philosophy

Considering that the broker had acquired wholesaler FM Green, Preston-based Wallwork Jensen and Wigan-based MG Smithies in the 18 months preceding Groupama's involvement, the acquisitions have been slower than expected, especially when drawing a comparison with Axa's rapid-fire broker purchases. Moors comments: "The big difference between before and after the acquisition (by Groupama) has been that we have become more focused on profitability. We have responsibilities to our shareholders rather than to ourselves." Evidence for this can be seen at Carole Nash, another north-west based broker acquired by Groupama, which has announced increased pre-tax profits from £6.3m to £7.6m for 2008 and cited "increased operational efficiencies" as one of the reasons behind this. At Bollington, the group's board meets each quarter - a gathering that also includes Groupama Insurances chief executive Francois Xavier-Boisseau, finance director Roy Sampson and business support director David Simpson.

Moors insists that there have been plenty of opportunities to buy but they do not appear to be in any rush or under any pressure to complete purchases. He reveals: "We were approached by 15 companies last year but none of them was going to add enough to the Bollington party." In terms of what they are looking for, Moors says that any potential brokers need to add something new in systems, products, niches or market share of a particular niche. He hints at one of the reasons why his broker is perhaps less keen to acquire when he says: "The old-fashioned consolidation model is dead in the water if not supported by insurers."

Watching brief

The last six months has heralded a change in attitudes by some of the former largest supporters of the consolidation model, with commission reductions on the agenda for the likes of Norwich Union and Axa. Moors' firm has had similar requests thrust upon it. Consolidation has slowed, with the likes of Cullum Capital Ventures picking up the odd small broker, yet it remains to be seen how long the lull will last and whether or not Moors and others are playing the waiting game as prices fall and the recession bites harder.

Moors is also keen to reiterate that, despite Groupama's involvement, it is not a tied agent and that he "was surprised by the recent resurrection (of this) relating to a comment on tied agents; it shows a fundamental misunderstanding of what it means." Moors felt so strongly about speculation surrounding his business and its independence that he wrote a letter to PB's sister title Post in September, which was a rigorous and passionate defence of the model of ownership that his firm has adopted (Post, 25 September 2008, p. 13) and where he cited delegated authority as an example of the closeness of insurer-broker relations.

Today, he says that its account has grown with Groupama but it still makes up only 5% of its total book, where as before it was 3%.

Whereas this relationship has grown, other insurer relationships suffered as they grew suspicious of the French insurer's involvement. Moors remarks: "Our relationship changed with some insurers and some accounts went backwards. However, others have grown and we are fully independent - using more than 25 insurers."

Last year, Moors and his co-directors decided to concentrate on the internal operational structure of the business and set upon a back-to-basics programme. The team identified key areas, such as integrating acquired companies and systems in order to make the business ship-shape and, according to Moors, "take advantage of others that aren't in shape". One of the initiatives has seen it move its other Bollington office to Addlington Court, several miles from head office. The move in December 2007 has improved office space dramatically; Moors proudly points to the floor space where the broker could incorporate further teams and staff. Bollington could be criticised for not being as expansive and bold as it once was but Moors appears to have considered focusing internally as an astute move and insists that this was always the plan, with or without Groupama.

Focus

Since the acquisition of £15m electronic wholesale broker Compucar in January 2008, the business has been, according to Moors, "concentrating on maintaining and growing existing accounts and becoming the appointed broker of affinity and trade associations, especially for niche products". Its care book is known as one of the best established and includes children's care homes, secure units, foster children, domiciliary care and elderly care protection.

The care book has moved from a specialist Lloyd's syndicate to mainstream insurers recently, as insurers reawaken their appetite for risk for such accounts following what Moors calls an "overreaction to the events of September 11, 2001" when many cleared out their accounts of such risks.

One growth area is fostering - there has been a reduction in the number of care homes and it grows more expensive to put children into such places. The company's retail and wholesale cover, which is marketed under the Bollington Care brand, is for liabilities such as intentional damage caused by the children, professional indemnity for the agencies that supply the children and public and employer's liabilities. In addition to making money from such a difficult area, Moors has given something back by employing people that have been in care. Moors is also active with the Insurance Leadership Group and the Prince's Trust and encourages brokers across the country to help young, disadvantaged people.

Bollington's wholesale account makes up 15% of its business and includes Compucar and FM Green - the latter was acquired in November 2006 - which has been re-branded as Bollington Wholesale. There is delegated authority, 300 brokers and risks such as couriers, taxis, motor trade, nightclubs and high-risk liability. In order to help achieve growth, Chris Patterson, formerly Manchester branch manager at Norwich Union, has been appointed as managing director at Bollington Underwriting.

The economic crisis has not hit the insurance broking community as hard as other sectors, partly as a result of increasing premiums, yet Bollington has lost some clients including failed independent motor dealerships. Moors concedes that there are fewer new business wholesale enquiries but is bullish in pointing to service and repair centres performing well in addition to second-hand car sales and warranties. Also, he says that the business is still generating new leads and that, in a recessionary environment, "marketing is more important than ever" (PB, March 2009, pp.22-7).

Outlook

Business is trickling in and the broker has secured an association with the Vehicle Security Installation Board, which oversees security installers across the UK, as appointed introducers. In addition, it secured an account with Unipart Leisure, an association of businesses involved in the supply of camping and marine equipment. These partnerships are important wins in whatever climate and no doubt show the growth signs of which Bollington's latest majority shareholders would approve.

Today may not quite be as exciting for Paul Moors and Stephen Wall as it once was when the duo had more control over the ownership of the business, though it appears that once the economic climate recovers and they once again find the right businesses to buy, they will have a leaner and fitter firm than before Groupama's majority acquisition. As long as Moors is involved, expect Bollington to keep thriving and, if you are going, you can try to catch him at the Biba conference in Manchester in May.

Groupama's Brokers

- Bollington (60% stake)

- Lark, London based commercial and high-net-worth broker (60% stake)

- Carole Nash, Altrincham-based motorcycle specialist

- ChoiceQuote, Liverpool-based niche personal lines and non-standard motor lines provider

- Insured Risks, Bristol-based, internet-only broker for small businesses and tradesmen

Bollington and Biba

Since 1 March, Paul Moors has been chairman of the Greater Manchester arm of the British Insurance Brokers' Association. PB asks him why Bollington rejoined and why brokers should attend this year's conference in his region.

Why, after five years out, did Bollington rejoin Biba in 2007?

It had regained its direction and spoke for the broader church. The commission disclosure debate with the Financial Services Authority was a great example of this.

How long will you be chairman in Manchester for and why did you take up the role?

I felt Bollington should contribute more and I have agreed to become chairman for two years. There are 12 brokers on the committee representing Greater Manchester, Lancashire and Chesire and, each month, the 12 regional heads meet in London.

What would you like to see Biba achieve in your region?

We want to promote the values of using a broker and to encourage young people to join the profession. We have already started work on this with the Chartered Insurance Institute and Manchester Evening News.

Why should brokers come to the Biba conference on 13-15 May at the exhibition centre Manchester Central?

This is the best event in the broking calendar and it is a great networking and learning experience. We want the conference to start embracing the younger brokers more and it is a great opportunity to send junior staff. It is free to all brokers and they can come for one day if they want.

See the contribution from upcoming Biba conference speaker Mark Davies of the Holistic Company on why some lateral thinking can help in managing your company through tough times.