Oval is Gallagher’s latest target in a series of takeovers – but integrating them all brings its own challenges
Asked last year about Gallagher eyeing up Oval as its latest acquisition, Oval chief executive Peter Blanc quipped: “If you’re a snake and you’ve just swallowed a goat, do you want to swallow a sheep along with it – that will be a bit chunky.”
Blanc is a man with a handy turn of phrase, and this sums up Gallagher’s situation well. In the UK, Gallagher has gone from a relatively sleepy wholesale broker to a major player following several large acquisitions since 2010.
If it buys Oval, Gallagher’s UK brokerage will be nearly the same size as Willis’s. To integrate so many different businesses in such a short time is a huge challenge.
Gallagher does not consolidate its UK businesses into one single account, meaning it will be difficult for outsiders to assess the success of the integrations.
The upside to all of this is that Gallagher can create a powerful distribution business. It would have the lot: a network; a footprint across SME, mid-market and corporate; a wholesale division; and a managing general agency (MGA).
Post-financial crisis, insurers are much tighter on their expense ratios and will fight hard against any attempts by Gallagher to raise commissions.
Instead, Gallagher would probably use its expanded retail broking arm to place business into the MGA. This could be a major long-term boost to revenues. To please its capacity providers Gallagher will have to consistently underwrite profitably.
The big plus for Gallagher is that it seems to have a solid corporate culture. You rarely hear stories of unhappy staff. It’s a big snake and, for now at least, a happy one.
Hosted by comedian and actor Tom Allen, 34 Gold, 23 Silver and 22 Bronze awards were handed out across an amazing 34 categories recognising brilliance and innovation right across the breadth of UK general insurance.
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