Gan and Lombard, the UK subsidiaries of French insurer Groupama, began to end months of uncertainty this week when head office released details of how the merged entity will operate.
Central to the new proposition is an improved service culture for brokers, based on a combination of decentralised underwriting that will minimise referrals and on centralised support functions. The new entity will also be aiming to strengthen seriously its affinity business, a key future area.
Additionally, it is pulling out of the underwriting of Torchline, its direct arm which delivers six per cent of group turnover. Here, it will become one of a panel of insurers and use the division as a service operation.
The company has now rebranded as Groupama UK Services but will continue to underwrite separately as Gan Groupama and Lombard Groupama until legal formalities are settled.
With a settled and strong parentage clearly established, Groupama believes it can impress brokers with a new approach to service. On offer is "a valuable and secure alternative underwriting market" that it hopes will appeal to brokers alarmed at the consolidation at the top of the industry.
Commenting on Groupama's new business objectives, which are labelled Project Advance, Tony Lancaster, chairman and chief executive, said: "It's back to basics for us. Pursuit of underwriting profits will be our key objective. We will charge the right rate for the right risk, and will not chase the market. If that reduces our top line and restricts growth, so be it.
"However, we are very keen to build on the valuable business partnerships that we enjoy, and see some real opportunities where we will be able to work together for mutual benefit." He conceded not all stages would be error-free, but promised to smooth the process.
Integration, which should produce £17 million of annual savings, will not be complete until some time in 2001. Personal and commercial policies will be reassessed in order to produce a new "best of breed" portfolio, which may be either a hybrid version or one or other of the existing policies. Brokers' views on the best of breed will be sought. The personal lines portfolio should be complete by March next year, and commercial by June. The broker clubs - Circle and Partnership - are under review, and a new preferred broker arrangement will emerge.
Groupama, now a Top Ten insurer with over £500 million premium income, is centralising its personal insurances operation in Manchester, with claims being centrally handled in Birmingham.
Commercial is being decentralised, with five regional centres in Manchester, Leeds, Birmingham, Croydon and the City, and five satellite branches in Glasgow, Newcastle, Bristol, Southampton, and Barnet.
As part of the rationalisation, offices are being closed where duplication currently exists. Lombard's offices in Manchester, Leeds, Bristol and Glasgow are being closed and their operations moved across the cities to the Gan offices. Lombard's Croydon office is relocating to Caterham, and its St Albans office is relocating to Barnet. In Birmingham, the Lombard office takes precedence.
In all, 310 job cuts are being made - 22% of the 1,400 strong workforce. Of these, 86 are vacancies that have been frozen since the merger talks began in earnest in May, following approval by Groupama-Gan. Senior appointments have been lined up over the past few months, and over 700 management appointments have now been made. The remainder of the joint staffs were told if they had a job on Monday.
The cuts include some voluntary redundancies and will be phased in over the next three years. None of the cuts falls in the claims or information technology departments. Substantial investment is planned in IT, with Lombard's Progen 2 serving as the group's IT platform.
