Coleman and Galbraith - Seaside ambition

Hastings and its surrounding area has not proved to be fertile ground for the consolidators, which has given an opportunity for Clive Galbraith and Duncan Coleman to acquire much of the local competition and double their broker's growth this year alone. In addition to the consolidators, Hastings misses out on much of the holiday and business conference traffic because there are no motorways nearby and it is still just over two hours by train from the capital. As such, there are few attractive hotels and business venues, something Galbraith - who is involved in several local business groups - is keen to address. However, the seafront is picturesque and the local economy could benefit from an influx of tourists this summer with credit-crunched Britons looking closer to home for their two weeks of beach time.

Although Hastings Direct has caught much of the media's attention over the last decade, the large personal lines broker is, in fact, based in nearby Bexhill-on-Sea. Galbraith's 19 year-old son, Stuart, has just started work in the claims department of a larger broker that was taken from Insurance Australia Group in a recent management buyout. The predominantly call-centre based firm has now embarked on a battle plan to open some trial shops on the high street, somewhere Green is entrenched firmly already.

Green Insurance, which trades under the name Green Campbell Fisk, is based in a row of shops in Hastings, although this is only one of ten offices throughout Sussex and Kent. The broker has been transformed by the leadership of Coleman and Duncan, growing from £2m gross written premium closer to almost 15 times that size today. The two met when Coleman, known as 'the doctor', was a Cornhill inspector entertaining cricket fan Galbraith at many a test match and county game, in the days when the insurer was the sport's leading UK sponsor.

Coleman joined the broker in 1997 and both he and Galbraith complement each other brilliantly: Coleman revels in detail and numbers and Galbraith is the 'people person' who can 'work a room'. Coleman notes his colleague as "somebody who is good at kissing babies and handing out cigars". When I meet them, soon after the Biba conference in Manchester, the brokers are busy trying to complete several acquisitions that have been in the pipeline for what probably feels for them like forever.

Epochal moment

The catalyst for the change in direction at Green, which was established in 1973, was the stepping down of the old directors' in 2001. This is the time at which Galbraith describes the broker as stepping into the modern era.

Over the last decade or so, there have been more than ten self-financed acquisitions including, in 2006, the transitional acquisition of Crowborough-based Campbell Fisk and Partners, which increased turnover by 40%. In July 2007, Abbey Associates was purchased in Eastbourne and, on 1 May this year, the broker completed the acquisition of South Downs, which is based in Stone Cross near Eastbourne. Green is finalising the negotiation of Worthing-based Graham Edwards currently and it is essentially a done deal. The duo are about to sign off on the acquisition of a £10m GWP deal for one of the largest independents in the south-east.

The deal would take Green close to £30m GWP and would really put Green on the broker map - consolidating its position in the top-50 commercial brokers - and would fulfil the ambitions set out in PB's Broking Success interview with Galbraith in June 2007 (p.19, PB, June 2009). He said then that there is no specific timetable for growth and maintains that each deal is done when opportunities arise rather than in any other way. Regardless, doubling the size of your business is no small challenge, especially in this economic climate.

The acquisition spree was meant to end in 2007 but several brokers approached them in 2008 wanting to talk. However, the opportunity to acquire was threatened by the banking crisis when Green's local bank manager had to cede authority to a central credit department that looks - according to Coleman - only at the hard financials rather than tailoring to a company's approach. Coleman reflects: "The concept of banking changed overnight and banks forgot what they were in business for. It became computer-based and could have led to people asking for loans in a manner that may not have been suitable purely to suit the system."

As such, the two were forced to look elsewhere and approached a multitude of insurers to investigate funding opportunities. Because they were a member of Aviva's 110 Club broking group from the beginning and coinciding with chief executive officer Igal Mayer's saying that he had money available for brokers looking to expand, it is not surprising that the insurer offered the brokers a five-year loan on commercial terms to fund acquisitions.

The 110 Club has been a good source of contacts for the brokers involved and clearly, for Green, being one of the larger brokers in the group has helped, with Galbraith gaining regular access to senior members of Aviva's team. Galbraith says: "In the old days, brokers would hardly talk; now they are far more open. It is a rarity to have access to so many brokers (at the 110 Club meetings)." The insurer is now trumpeting the club as an example of how it has managed to win more business from independent brokers and has helped stem the flow of consolidation: it hopes that the Broker Independence Group will play a similar role.

Green had a large book of business with Aviva already but it is also keen to deal with other insurers locally, having an eye on developing relationships with the likes of QBE and AIG.

Despite taking on the additional funding, Coleman and Galbraith are keen not to be saddled with too much debt and question how sensible it is take a 15-year 'mortgage' when acquiring, as Coleman reflects: "Holding a client for 15 years is a long time," to which he adds "you can't tell when the next big direct player might come along and steal your clients". He comments: "We will pay the vast majority of the loan back within five years. We have low overheads and are focused on the bottom-line return."

Despite a large, diverse board, both own over 40% of the broker each and there are two other smaller shareholders. Although they are independent, they have not ruled out raising more money through private investors and private equity, hinting that they have had interest from several parties and that this could be an agreeable way to grow the business, no doubt only if it were in line with their conservative ambitions.

Pleasurable business

The two appear to enjoy buying brokers, with each acquisition bringing a new challenge. Rather than increasing commission pulling power through insurers, as is the case for many acquirers, Galbraith says that most of the savings and profit margin is generated by changing systems such as information technology service facilities and introducing scanning. They act quickly on this front especially: the last purchase was completed on 1 May and the systems were changed the next day.

However, the brokers are very aware of the needs of staff they inherit when purchasing a broker and are keen not to rock the boat. Galbraith says: "We look for continuity and want to bring everyone along with us. We don't think 'what we do is best' and will look at things to see where we can improve. We are not going to go in with a sabre to change 20 years of culture."

Coleman adds: "We want harmony and to create a sense of security. There is an inevitable uncertainity and fear and you have to accept you cannot prevent those emotions. We try to make sure that staff are aligned with their clients and that the pay check is on the same date. We have had a low staff turnover, with only three staff leaving last year out of 60; two of those were through retirement."

Green's diverse book of customers, from £50 premium bricklayers to vast property portfolios, has kept it in reasonable shape to navigate the choppy waters of the recession. Dealing both in personal and commercial lines including fleet, property and directors' and officers' covers, the broker has also developed a number of diverse schemes for cleaners, dog groomers, brass bands and the English Chess Federation among others.

Although many say that those in insurance should be relatively immune from economic upheaval because it is a must-have purchase, Galbraith says that it is different when you see clients going bust or reducing in size. He comments: "We teach staff to go out there and we try to stay as close to our clients as possible through our local offices: you can't take clients for granted." Despite budgeting to stand still this year, the brokers feel that it is now time to flex their muscles, admitting to not doing enough marketing: most of its business comes from referrals, something that they are determined to change. Galbraith remarks: "We have developed our website and want to do more upselling and cross-selling. This is as good a time as any to knock on doors to see if we can look at potential clients' insurance."

Inconsistencies

However, it is becoming harder for brokers to keep clients happy as too many insurers are allowing dual-pronged pricing methodologies for new and existing clients. Coleman says: "We have seen evidence of a case where, on renewal, the client was offered a premium of £100,000 but, on a new business quote, it was £70k. Although there has always been a little bit of price differentiation, it undermines our professionalism." Galbraith reflects: "We have no issue with better rates, policies and commissions but if it is 25% less then there is an integrity issue because businesses talk to each other." Galbraith is also concerned that the hardening market is happening at the worst possible time but realises that there is little alternative for insurers, although a more measured hardening would surely have been more helpful for customers, brokers and insurers. This seems to be a wish too far, though.

Sussex and Kent have proved to be a happy playground for Galbraith and Coleman to spread the name of Green Insurance and the broker is a testimony to how provincial broking has a long-term future. Finding himself skiing alongside Peter Cullum and Alex Alway earlier in the year, Galbraith can reflect that his profile is growing and his business is going in the right direction. Walking around Hastings with Galbraith, you can see how he has made his presence known locally, partly in this instance because it is a small town of fewer than 100,000 people. The business has expanded from a local base, demonstrating that you can stay local and grow at the same time. If Hastings works on its hotels, conference centres and transport network to propel it up the ladder of the UK's public consciousness then the status of Green will be enhanced further. Galbraith and Coleman are doing their part in pursuit of this and their partnership is set to become stronger as their business grows - especially if they can garner some more capital investment.

Duncan Coleman

From 1983 to 1988, Green's managing director Duncan Coleman worked at HWH & Co. Insurance Services as a trainee broker. In 1988, he joined Cornhill as general business inspector before leaving for Bishopsgate in 1991, where he became a travel development underwriter. In 1994, Coleman joined Lombard as schemes development underwriter. He became a partner at Green in 1998, where he has stayed ever since.

Clive Galbraith

Chairman Galbraith began his career at Cookesley Insurance Brokers 1981 before joining Green's in 1983. He has been a partner at the broker since 1987. Married with three children, he is a keen sportsman, though descibes himself as 'inept', playing golf, cricket and football. He is a big Everton fan.

Brief history of Green

LG Green & Co was formed in November 1973 in Hastings and was incorporated as Green Insurance Brokers in 2001 with a separate IFA company, Green Financial Planning. Since the acquisition of Campbell Fisk in 2006, the broker has used the trading moniker of Green Campbell Fisk.

Acquisitions: Abbey Associates; AC Insurance; Bridgland Insurance; Burchell Davies; Campbell Fisk; Harold Lawrence; Hastings Insurance Centre; John Leonard Insurance; MHC Insurance Services; Peter Shrub Associates; Philip Everitt Insurance; RJ Jackson; South East Insurance; Webb & Co.

Latest acquisitions

Graham Edwards; South Downs.