Underwriter says it may benefit from gloomy housing market
Gloomy forecasts in the UK housing market may work to the advantage of Allianz’s Home & Legacy which predicts major growth on the back of its new letting product.
A year and half after Allianz acquired the medium and high-net worth underwriting agency, its first product has been rolled out along with major growth plans that could fly in the face of sceptics who initially questioned whether the insurer paid too much in the deal.
Despite reports that property prices are stagnating and the once booming market is slowing significantly, Home & Legacy managing director Barry O’Neill said he sees real growth potential for the company’s new letting product as landlords look to protect themselves against cash-flow disasters.
O’Neill wouldn’t talk numbers but said he expects the profit for Home & Legacy Let to be significant.
He said: “Over the next couple of years we expect multi-million pound premiums.”
Currently there are more than two million properties to let in the UK and with less people looking to buy homes, letting properties have become increasingly popular with rent prices increasing by 4% over the last six months, said Home & Legacy consultant Peter Brown.
O’Neill said: “When you look at the total size of the market there is a huge opportunity to get existing landlords with inferior products to switch to Home & Legacy.”
The product will protect landlords against a wide-range of material damage, liability risks, legal expenses and cash flow disruptions.
Home & Legacy is planning to launch six more products over the next 12 months.
Managing director Barry O’Neill said the company is still working on the order in which to roll out the products and will continue along the lines of high net worth and medium net worth products.
H&L Let is the first product the company has rolled out since it was acquired by Allianz more than a year and half ago for what is believed to be nearly £60m.
Jelf bucking trend with M&A activity
As analysts speculate that the credit crunch will significantly slow merger and acquisition (M&A) activity, Jelf appears to be bucking the trend by expanding its acquisition team.
Phil Barton, commercial director for Jelf, said the broker had recently added to its existing team and currently had its sights set on about 40 potential acquisition targets.
Barton said talks were ongoing and that Jelf saw plenty of opportunity in the market.
Ian Clark, corporate finance insurance partner at Deloitte, recently predicted that the M&A frenzy would slow this year as banks cut down on lending due to the credit crunch and subprime mortgage crisis that erupted in the US.
Clark said banks were going to become far less willing to go into debt and this was expected to decrease the value of acquisitions.
It is believed that those acquisitions currently in the pipeline will continue to go ahead as brokers look to empty their war chests.