14 bidders battling it out in a deal for French insurer’s UK insurance arm and broking businesses

Francois Xavier-Boisseau Groupama

Gallagher is the latest bidder to have joined the race for Groupama’s UK broking assets, Insurance Times understands.

Sources say that Gallagher is looking at a deal for the French insurer’s broking part of the business through its managing general agency arm OIM, headed by Sian Fisher.

The Groupama brokers would potentially make a good fit with OIM, which is a unique MGA model in that it distributes capacity to broker schemes across the UK.

Motorbike broker Carole Nash, which has a range of niche products, would presumably work closely with OIM’s personal lines specialist arm called Gallagher Heath Insurance Services (GHIS), and OIM would turn on the capacity taps for any schemes business that Bollington and Lark put together.

14 bidders fight it out

Insurance Times understands that four bidders are interested in buying Groupama’s broking arms and 10 in buying others parts of the business.

Private equity firms Gresham and Charterhouse, through holding company Acromas, have also thrown their hat in the ring for the brokers.

For Groupama’s underwriting arm, private equity firms JC Flowers and Charterhouse earlier this week emerged as the front runners, Insurance Times understands.

“Messy” bidding process

Finally, in what has been described by one insider as a “messy” bidding process, a consortium of investors, outside of private equity, is said to be in the bidding for various parts of the operation.

AXA, Aviva and Allianz are all believed to have dropped out of the running.

Groupama put its UK insurance operations, including insurer Groupama Insurances and brokers Bollington and Lark, up for sale at the end of last year after being hit hard by the eurozone debt crisis.

Improving profits

Meanwhile, recently released accounts on Companies House show that GUK Broking - which includes Bollington, Lark and Carole Nash - made a profit after tax of £5.7m in the year to 31 December 2011 (2010: loss of £2.3m).

The profit after tax was helped by by a lower charge for depreciation, amortisation and impairments of £5.6m. The 2010 accounts took a £13.5m hit.

When group-level accounting costs - including broker expense acquisitions, amortisation and interest payable on loans from the parent company - are stripped out, the broking divisions made a profit after tax of £9.6m (2010: £9.3m)

GUK total  2011 revenues were slightly lower than 2010 at £66.1m versus £67.2m.

GUK  2011 shareholders’ equity was £113.1m , up 5% on 2010’s £107.4m.

GUK Broking 2011 vital statistics in £m  (compared with 2010)

  • Commissions and fees: 64.4 (65.5)
  • Total revenue: 66.1 (67.2)
  • Operating profit: 9 (2)
  • Result after tax: +5.7 (-2.3)
  • Shareholders’ equity: 113.1 (107.4)