CFC Underwriting’s managing director on why the MBO from Hyperion was the best thing he’s done

David Walsh CFC

David Walsh has a spring in his step today as he greets Insurance Times with a smile. The managing director of CFC Underwriting is on the up having led a management buy-out (MBO) from Hyperion. As a show of faith in his managerial ability, just under half the staff bought shares in the business as part of the MBO.

Walsh is keen to talk about the MBO and what it means for his cyber specialist business, based in Gracechurch Street at the heart of the London insurance market. First though, a bit more about Walsh, who is making his first appearance in Insurance Times.

Technology industry

David Walsh, CFC Underwriting

Walsh has had a colourful career, spanning from the buzzing technology industry in Israel to the late lunches of the London insurance market. By his own admission, Walsh fell into insurance. He landed his first job working in professional indemnity for Marsh in the 1990s, prior to joining what is now Howden Insurance Brokers.

“That really crystallised my passion for insurance because having come from a big company like Marsh, which is great in many respects, to suddenly join a business with 10 people and to be involved in the whole thing, was really great,” he says.

His next move was to Israel, where he worked for 18 months as an in-house professional indemnity broker.
It was the late 1990s and the start of the boom, and by pure luck for Walsh, Israel was a thriving technology market, listing a new potential client worth millions of dollars in premiums on the Nasdaq every week.

“It was a great time to be there and part of the boom and probably one of the most exciting places outside of Silicon Valley,” he says.


[The MBO] is a positive message to staff. We have a really long-term plan for the business now’

David Walsh



It was during his Israeli tour that Walsh had the idea to set up a business to distribute cyber liability policies. His intermediary business would offer compensation for financial loss if a firm’s computer systems were hit by a virus or malfunction. With the idea still buzzing his head, Walsh returned to the UK in late 1999 as director of broking at Howden.

Bitten by the bug

However, the entrepreneurial bug had bitten Walsh hard. He resigned from Howden to concentrate on setting up
his cyber liability business. David Howden, an entrepreneur himself, saw the potential in the new venture and offered
to back it.

“David just said, ‘I think that sounds like a good plan, I’d like to invest in it’. That was really the basis for Click for Cover [as the company was previously called], and we planned to sell cyber liability through internet service providers,” says Walsh.

CFC’s first client was BT, for whom it was tasked with selling cyber liability to its small business clients purely online. But in 2000, when the bubble finally burst and CFC lost clients, Walsh decided he needed a wider base of clients and decided to turn CFC into an underwriting agency to start selling through brokers.

Over the next decade CFC branched out to offer excess liability, directors’ and officers’, and insurance for research and development companies and IT professionals. The company now boasts a customer base of 14,000 white collar small
businesses across 51 countries.

Financial strength

CFC Underwriting’s results have been impressive. Last year, the company turned a profit of £3.3m (2010: £3m) and gross written premiums of just below £50m (£36m).

The financial strength of CFC meant Walsh didn’t have too much trouble finding backers for the MBO, bringing in six private investors to back the company, including original Benfield partner Mike Rees and former Lloyd Thompson managing director and RK Harrison chairman Richard Corfield, who takes over as executive chairman on 1 October.

Meanwhile, all staff were offered an option to buy shares in the new company. Around 40% have taken up the offer.

“It’s a really positive message to staff because the great thing about getting private individuals’ money versus private equity is we have got a really long-term plan for the business now,” says Walsh.

“Certainly we had lots of brokers call us up and say that they know either Richard or Mike and had nothing but good things to say about them, that they are particularly excited that we are going to be a fully independent business and would like to do more business with us.”

Walsh says it was always the plan for Hyperion to invest in CFC as a stand-alone business and exit at some point, adding that the MBO, which was completed in March, had been in the offing for a couple of years.

The right time

With Hyperion focusing its resources on its upcoming initial public offering, Howden Broking Group and underwriting agency DUAL, it was the right time to press ahead with the deal. Another reason, and arguably one of the biggest, was so that it could smooth the way for Hyperion to buy Windsor.

The latter, with £12m operating earnings, which could have cost between £40m and £60m, and it’s likely Hyperion would have wanted cash on the books before completing the deal.

Walsh says he doesn’t really know if Windsor was a reason for the deal, but says: “I think Windsor is a great deal for them both,” adding that Howden Broking Group will continue to be a key broker partner for CFC and that David Howden is “still a good friend”.

Small business and affinity market

There’s plenty to concentrate on at CFC now, which lists Apple Consultants Network and the Zumba Fitness Instructor Network among its largest clients. But Walsh says that having such big clients won’t distract him from focusing on the company’s small businesses and affinity target market.

Looking ahead, Walsh plans to concentrate on the core markets of the UK, USA, Canada and Australia, in addition to Israel, Malta, Gibraltar, Sweden and Spain.

Given his passion for technology and insurance, it’s little surprise that Walsh and his MBO-inspired team see the world as their oyster when it comes to further expansion.

David Walsh, CFC Underwriting


Born: London
Hometown: London
First job: Marsh
Family: Married with two children
Interests: Playing tennis and squash, running, watching Chelsea Football Club or England Cricket Club, Reading, chess and family time

In his own words:

Having come from a big company to suddenly join a business with 10 people and to be involved in the whole thing was really great”







GWP: £50m
Profit: £3.3m
Offices: 1
Employees: 51
Market view: David Walsh has taken CFC Underwriting from an initial concept to a business worth £50m in GWP in the just 12 years. After a successful management buy-out, and with private investor backing, all eyes will be on how he develops the business over the next year.