Groupama has beaten off broker competitors to buy a majority stake in top 50 broker Lark Group for what is believed to be in the region of £47m.

The acquisition, which was predicted by Insurance Times in July, follows the purchase of a 60% stake in Bollington Group.

Lark, which is ranked in the top 10 of independent brokers and controls £75m in premiums, is a big player in commercial and personal insurance ,but also specialises in niche areas such as high net worth (HNW).

Lark will retain its brand and continue to operate individually under the leadership of its executive directors.

Groupama chairman and chief executive Pierre Lefèvre said: “This investment moves us towards the UK’s top 20 largest intermediary groups with nearly £60m of brokerage and premiums of £220m.

“Our involvement with Lark will complement our other retail businesses and will offer us a good balance and some strong foundations from which to build.”

Lark chairman Graham Lark said Groupama was not the highest bidder but presented the most attractive offer.

Broker Network and US broking giant Hilb Rogal & Hobbs (HRH), which acquired Glencairn in January 2007, are also understood to have made offers.

A spokesman for the insurer said the acquisition would allow the company to boost its access to the commercial SME market as well as provide ties to certain niche areas.

Lark is one of the top five brokers for the leading HNW underwriters – an area in which Groupama has no previous expertise.

The spokesman said the insurer had no plans at this point to underwrite HNW.

Previous acquisitions by Groupama have had niche significance, such as the purchase of motorcycle specialist Carole Nash and motor trade and care expert Bollington.

Groupama’s broker acquisition strategy has been questioned by some sections of the market (see panel below).

An opaque move

Michael Faulkner questions insurer strategy

Groupama's purchase of Lark Group was arguably the second worst kept secret in the insurance market after AXA bought Smart & Cook.
But compared to AXA's assault on the broker market, Groupamas strategy of broker ownership seems less clear.
While its acquisition of niche broker Carole Nash seemed logical, Groupama is a major motorcycle insurer and had a significant chunk of the Carole Nash business, its forays into the commercial broker market have raised eyebrows.
To many, Groupama's strategy is somewhat opaque and disjointed.
In June it acquired a majority stake in Macclesfield broker Bollington, which has expertise in motor trade and the charity and care sectors.
The insurer said the deal was attractive given the opportunity for profitable growth within the UK SME market and the fact that Bollington was a significant player in a number of niche areas where there was potential for profitable development.
It has propounded a similar justification for the investment in Lark, saying it provided access to the commercial SME market as well as offering ties to certain niche areas.
Yet to critics, the Groupama acquisition smacks of a knee-jerk response to AXA's plans.
AXA appears to be developing a consolidating broking division with a regional spread and a growing range of specialties (the acquisition of Davis Group adds a freight niche).
It is also planning to integrate the brokers in the next year or so.
Groupama appears to be doing none of that. There seems no clear picture emerging as to why Groupama has targeted these brokers, which are also operating independently with no hint of integration.
Undoubtedly, Groupama executives have a plan, but they are keeping it very close to their chest.