Zurich and Allianz tipped as potential buyers

Erinaceous Insurance Services’ (EIS) executive chairman, Leslie Goodman defended the record of the division of the troubled property group as it raised the for sale sign this week.

Goodman, who joined the company as part of a senior management reshuffle in November, said Monday’s announcement of the likely sale on the Stock Exchange had been precipitated by a significant number of approaches from blue chip companies, including insurers, brokers and private equity companies.

A sale is one of a range of options, including a debt for equity swap, or a further injection of private equity.

Though he would not be drawn on the likelihood of a sale, he described it as a realistic option, adding: “I anticipate serious progress by the end of the first quarter of this year.”

Goodman acknowledged that the business needed more customer facing staff in order to get back to full speed, but played down suggestions it was in decline.

EIS posted a 40% fall in profits to £4.9m in its interim results last year. Revenues, meanwhile, fell by 3%.

Commenting on the group’s ailing reputation, Goodman said: “I take the point about the reputational issue. But [EIS] is insulated from the group. We have no debt burden.”

Sources close to Erinaceous claimed it could fetch a price in excess of £100m – a figure widely disputed by market sources, who named £50m as a more likely figure – and over three times its brokerage of £29m. Market sources added that a sale to an insurer was the most likely option. EIS has been linked with a number of insurers, including AXA, Zurich and Allianz.

A source at a major insurer said: “I think it is an insurer buy. Commercial property business is low admin, high commission. Insurers could take that business direct.”

But some sources said the financial difficulties that have dogged the parent group for the past year – culminating in the company’s share price falling from £3.70 to 3p – could scare off potential suitors.

A senior broker source said that there was huge potential value in Erinaceous’ insurance business provided its client base was retained. This could prove difficult following a steady exodus of senior staff – including over 20 to Towergate last year.