Towergate plans heavy investment after buy-out of underwriting agency
Towergate said it will maintain Fusion's current broker relationships and will expand its product range, following the purchase from SVB.
As predicted by Insurance Times on 8 September, Towergate announced its purchase of the underwriting agency via a newly-formed subsidiary, Broomco 3881.
Norwich Union (NU) will replace SVB as 100% capacity provider for Fusion until February 2006 when a panel of insurers will be established to supply capital.
Peter Cullum, Towergate executive chairman, said Fusion would grow independently and would be expected to double its turnover within 18 months. In October 2004, Fusion's GWP was £103m.
Cullum said: "It is fair to say Fusion has not received the level of support it expected from SVB in the last year. We will be investing significantly in Fusion."
He said cash would be pumped into developing technological systems, and doubling its 145 staff within 18 months.
Cullum added there were also plans to expand Fusion's business range. "Fusion targets the medium sized businesses of the SME market. We will look to expand that to include the smaller end too."
Kevin Pallett, managing director of Fusion, said the company would sit alongside Towergate's underwriting arm. He confirmed it would have access to the broker base of the company.
The purchase of SVB's majority share in Fusion valued the underwriting agency at £25m.
Broomco 3881 will be run by Fusion's existing management team. The Fusion management and staff will receive cash and shares in return for their 40% stake.
The acquisition will add £100m gross written premium (GWP) to Towergate's annual GWP of £1.26bn.