As expected, French mutual insurer Covéa will merge its UK arms MMA and Provident. But will brokers lose out in the long run?

When French mutual Covéa acquired Provident for its UK portfolio back in April 2011, its intention was to run the motor insurer as a separate business alongside its existing broker-only insurer MMA Insurance.

Yesterday, however, it was announced as widely expected that MMA and Provident are to be merged through a part VII transfer. Covéa said this option would provide the business with the best platform for growth, but it will have to convince the broker market that this is the best move.

Both brands were popular among brokers, particularly as niche providers of motor products, and Covéa will need to prove its commitment to the broker market when it launches its new UK entity, Covéa Insurance.

The merger could also give Covéa a platform to push into the direct market. It is already working on the launch of a new aggregator, backed by £20m of marketing spend, despite pushing back the launch to later this year because of concerns about introducing another brand-led campaign into an already competitive market.

Whatever it decides to do, the combined Provident/MMA business should become an essential piece of the jigsaw in Covéa’s direct market strategy. It has also been touted as a potential buyer of Groupama and Brit Insurance’s UK businesses. Then there’s Swinton, the other jewel in the Covéa crown. The high street broker, already one of Provident’s key trading partner, is another major distribution channel.

Hodges’ hiring headache

The revolving door at Towergate has swung into action already this year. Two managing directors, Andy Smallwood and Sally Swann, have departed, leaving new chief executive Mark Hodges with a new headache.

Smallwood is tipped to join his former boss Dave Partington at Gallagher proving that an ongoing tug-of-war between the two heavyweight brokers does not look like ending anytime soon.