B&B looks to boost income six-fold through acquisitions

Insurance Australia Group (IAG) has handed its broker Barnett & Barnett an acquisitions war chest to compete with the likes of Bluefin and Giles.

Barnett & Barnett managing director Neil Campling said his mission was to boost premium income from £25m to £150m, probably over the next three to four years. That would be achieved by making up to six acquisitions, targeting brokers in the mid-corporate sector, he said.

Acquired firms would largely act independently, although there would be the possibility of a rebrand in a few years. The business could also have a financial services arm, such as wealth management.

Campling said: “We want businesses that are capable of managing themselves to a large extent: management that wants to stay or have a succession of guys coming through. They are likely to have very similar values to the Barnett & Barnett proposition.”

IAG is switching its focus to commercial lines. Last year, it sold its personal lines broker Hastings to a management buy-out, and the Equity high street chain to Swinton.

IAG has been buoyed by a strengthening Australian dollar, and management have also given its UK insurer, Equity Red Star, cash for acquisitions. Campling said brokers would not have to worry about the financial stability of the group. “With IAG they are obviously cash rich. The balance sheet is massive.”

He believes that prices – in terms of multiples of brokerage – have come down to a realistic level. He said: “The price range is 1.25 to maybe 1.7 at the absolute tops.

“They have definitely come off where they were two to three years ago. They are far more sensibly priced, but clearly there are fewer opportunities.”

IAG bought Middlesex-based Barnett & Barnett two years ago for an undisclosed fee.