The withdrawal of Groupama from the UK will have sparked a range of concerns from the broker market

The eurozone crisis has finally reached the doorsteps of broker offices up and down the country, with the news that Groupama is to sell its UK operations.

Groupama is aiming to offload its UK arm to prevent a damaging one-notch downgrade from rating agency Standard & Poor’s into junk status.

Brokers’ concerns about this will be two-fold.

First, there’ll be concerns about Groupama’s current solvency. However, as chief executive François-Xavier Boisseau points out, the UK arm is capital ring-fenced with a solvency margin of 190%. But let’s just suppose that, in a very worst case scenario, somehow it happens that Groupama can’t pay out on claims. Do you think that the French government and Sarkozy, with an election coming up, would let the company fail? Never.

Less choice

Secondly, the other concern will be about losing a broker-only insurer with its focus on service. If Groupama is taken over by a rival insurer, and the business subsumed into the insurer and the brand eradicated, it will mean brokers have a more restricted choice of where they place business.

That would be a great shame. Brokers were peeved at the loss of the personal lines book of NIG. Another loss like Groupama will just reinforce the feeling that they’re being deserted in SME at a time when direct is growing in that space.

The best takeover for brokers would be by Covéa – a service-oriented insurer with an attitude of stability and steady growth that would fit in with Groupama’s culture.

However, Covéa already has MMA and Provident to contend with, and may not fancy digging into its pockets again to buy a business that may simply duplicate what it already has.