Two decades of growth

When you are trying to set up a rival business down the road from your existing company but have not quite finalised the details, the last thing you need is your software company of choice ringing your current boss to ask the whereabouts of the proposed local broking firm. This is what happened to NPA's owners, Bob Pybus and Cliff Nott - each 50% shareholders - who were promptly fired and realised that this was the point of no return for their plans, which were, in part, driven by not feeling adequately rewarded for their hard work. Starting out in a soft market in 1990, they found it a great year for attracting clients, only to see rates hiked in many cases by over 30% by 1991; this in turn provided the new broker with the springboard for further growth because clients had little choice but to pay more.

The two were at ease running a small broking firm and in comparison to the last few years it was plodding along, growing to around £3m of gross written premium by the end of the 1990s.

Recalling that time, Pybus - who had just returned from a week's cruise around Europe courtesy of Aviva - says: "It was very much a lifestyle business and, although we were growing year on year, for a long time we only had one account executive to bring in the business."

NPA's first acquisition was St. Albans-based Callican and Co in 1998. This was a turning point in the broker's history, despite bringing in only £300,000 of premium.

It was not until early 2007, that NPA - called Nott Pybus & Associates originally - really began to gain momentum, this at a time when many brokers were considering either selling or growing their own businesses. Pybus says that market conditions and insurer attitudes brought him to the realisation that generating greater premium for insurers was becoming increasingly important. Rather than sell to a consolidator or network, Pybus wanted to generate this growth himself. He explains: "We realised we couldn't stay at the same size if we wanted a voice at the top table with insurers, a position from which we could negotiate commission enhancements."

He continues: "I have the mindset of not wanting to work for anybody else and many who have sold have found it difficult to change."

In early 2007, Pybus managed to complete negotiations on funding through a mix of a bank, two insurers and Premium Credit. He comments: "We thought the risk was worth it and that we could negotiate a three-year payoff. It was an interesting deal [with the parties providing funding] and rewarding." In March 2007, NPA embarked on its largest acquisition, Supreme & St Albans, managing to fight off rival interest from a large consolidator in the process. With the group's premium total doubling to £15m, NPA was able to satisfy more easily the demands of insurers, with Pybus keen to place as much with each carrier as possible.

In October 2007, a year notorious for the number of broker acquisitions that took place, NPA bought Uxbridge-based Heath and Brown Insurance Services, adding a further £4m of premium income. Pybus doesn't want to stop buying, stating that NPA has a healthy source of credit and that his firm is currently in talks with a £3m broker. The immediate plan is to build a £25m GWP business by the end of the year - one year ahead of a five-year plan.

Satisfaction

With a business that has grown for nearly two decades, Pybus appears content with how his status has evolved with insurers. He comments: "We had a reasonable profile before but it has now changed significantly." NPA deals with a wide range of insurers - including Arista, Allianz, Aviva, RSA and Travelers - and has a binding authority with Brit for smaller commercial risks. He remarks: "All our business is based on relationships with insurers. Our operations director, Richard Bigden, is ex-RSA and has a lot of contacts."

On the whole, Pybus is positive about the level of service from insurers and says that even Axa - which has been the subject of much criticism from brokers - has been "very good" to NPA over the last few years; in part, he feels that having the same personnel at both the underwriter and his firm has helped.

NPA is a member of Aviva's independent broking group, the 110 Club. Pybus feels that Aviva had "a blip from September to March" when it was trying to drive the market rate but that this was resolved in April, leaving him comfortable that a corner has been turned in this relationship.

The majority of the broker's business is SME: average premiums lie between £7,000 and £8,000 and most of the business is local. Commenting on the prevailing economic hurricane, Pybus is bullish: "We budgeted for a drop and so far are above budget. We are lucky there is no significant exposure in any particular sector." The long-predicted hard market is still failing to materialise. However, Pybus has seen some upward rate movement at the smaller end but says that anything above £10,000 is not moving.

Pybus believes that the market is not going to harden dramatically, despite combined ratios being far too high. He says that insurers are still doing "stupid things", with some insurers offering "completely different rates" through managing general agents - something that he does not understand the reasons for.

In October, the broker changed its corporate branding to consolidate the various acquisitions and names under NPA. A distinctive logo was introduced and the firm moved its head office in Hitchin closer to the town centre. Pybus appears a reluctant convert to the benefits of marketing but is willing to give it a go: "We have started to raise awareness of the firm through an e-mail campaign and follow-up phone calls. Marketing is a long-term investment and so far it has been about name recognition."

Sizeable benefits

Pybus is happy to have greater staff numbers today than ever before, giving him the opportunity to delegate: he does not miss some of the onerous administration tasks that he had to undertake previously. Nott is in charge of technical issues such as broking operations and accounts, freeing Pybus time to spend time on strategy meetings for sales and marketing with a considerable amount of networking thrown in. Suggesting that a healthy dose of his time is spent on the nation's fairways, there are many golfing photos in Pybus's office and he talks freely about several longstanding social groups established through his job.

On completion of the interview, Pybus had another overseas adventure, this time cycling to Paris to raise money for a meningitis charity.

He appears contented and reflects: "The market is still an enjoyable place to be and I enjoy doing the deals and building relationships."