Getting big by thinking small

Fresh blood is set to be introduced into the independent broker market in the shape of a new regional mini-consolidator, as revealed by Insurance Times today.

It will be led by former Towergate managing director Stephen Duffy, who has backing to build a new broking business in the North West. It’s still early days for the new company, which has yet to be named, but it’s a positive sign that brokers are willing to take a chance in the regions and investors still see value in splashing cash on new ventures now that consolidators are not as acquisitive.

Duffy’s new business won’t quite compete on the same level as established consolidators such as Towergate but, with plans to buy three brokers in the next three months, it gives him an opportunity to bring together local businesses that can maintain their core broking principles.

This could herald the start of an interesting period for small and medium sized brokers. With consolidators’ strategies changing to focus on organic growth opportunities, regional brokers might be tempted to dip into the acquisition market and consolidate in their local areas. This is of course how the small brokers of today become the bigger brokers of the future.

CFC sale could be good for everyone

Out of the blue this morning came the news that Hyperion is selling a majority stake in CFC Underwriting. It might have surprised a few but would make sense if the Windsor rumours are to be believed.

By selling a majority stake in CFC, Hyperion can offset the costs of a deal for Lloyd’s broker Windsor.

Hyperion is gearing up for a stock market flotation and analysts have already expressed their doubt that Hyperion could carry off a float while also buying Windsor, so that’s something the management team will want to clear up many months before a listing to attract potential investors.

Meanwhile, for CFC the benefits are that it’s a specialist underwriter with plenty of scope for expansion in emerging markets. That means it’s exactly the type of business that management would want to pile their money into. All in all, the CFC sale looks like a deal that benefits both parties.