With a Highland sweep of acquisitions, Giles Insurance chief executive Chris Giles has transformed a local Ayrshire broker into a player on the national scene. Michelle Hannen talks to him about his plans to build a UK-wide business
"I'm a risk taker. I'm a risk preferring person." With commission income that has grown from around £1m eight years ago, when he took the family business over from his father, to £15m this year, it's no surprise that Giles Insurance chief executive Chris Giles has taken some risks. Through both organic growth and acquisitions, including that of failed broker Ward Evans, he has turned Giles Insurance from a local Ayrshire broker to a top 50 UK broker. Following on from its recent acquisitions in Birmingham, Giles has just completed the acquisition of Inverness broker MacFarlane Bruce, which he says is a good example of the Giles business strategy. By opening an Inverness office in early 2002, Giles established its own operation in the area, and has now grown by acquiring other local brokers in order to fulfil its goal of becoming a top three broker in each of its locations after five years. "Unlike Folgate, we'd rather start in an area from scratch where we're not represented and then acquire after a few years," Giles says. Last month, the business opened start up offices in Manchester, Newcastle and Warwick, with a Crawley office set to follow later this year and Giles says his intentions as a consolidator in those markets are clear. In the Scottish market, Giles says he's keen to use the Inverness base to accelerate the company's expansion into Dundee, Perth and Aberdeen, but his next acquisition will be that of a Glasgow broker, which Giles predicts will fuel consolidation in the Glasgow market. However, his biggest ambitions lie in the South of England, and while Giles is tight-lipped, the smart money is on the company making a significant acquisition before the end of the year. He says the programme of acquisitions planned for 2004 will push its premium income up from the current £75m mark towards £100m by the year's end. A management buy-in is also in the works, which will see Giles sell down the 70% stake he accumulated when his brother, Nick, left the business late last year. The deal will turn Giles from a family business into a corporate venture. The new structure, scheduled for completion around October or November, will leave Giles with a 35% stake, and see 30% split between key staff. Giles also plans to bring in a venture capital investor who will hold the remaining 35%. He is not concerned about relinquishing his control of the business. "I would rather run a business professionally with a minority shareholding than hide behind a majority one," Giles declares. "I could sit and wait for another year of two and sell out for £25m and take £15m, but I'm in it for the long term. I want to build a UK business."His ambitious plan culminates in a stockmarket listing by 2008 at a valuation he hopes will be between £50m and £100m. After that, the sky is the limit, with Giles talking of further acquisitions, organic growth and even international expansion.
Fierce competitorCompeting brokers can attest to Giles being a fierce competitor who polarises opinion. Unlike many in the industry, who seem embarrassed by its reputation, Giles says there is prestige attached to being a broker, as it provides access to the decision makers of client companies. His enthusiasm is obvious: "I love insurance. I love the way the value chain works. I love chasing business as well as winning business. The politics is fascinating."Also unlike many, Giles sees the softening market as an opportunity rather than a threat. He says a soft market is the best time to make acquisitions, which help to ensure the business keeps growing during tougher times. "We have to keep our wits about us. We have to get closer to insurers. But you have to scrap," he says. Not one to shy away from a scrap, Giles is critical of the "unrealistic" expectations insurers have set for brokers this year. He says growth targets of between 12.5% and 30% actually translate into delivering growth of 22.5% to 40% when an average rate decrease of 10% across the board is taken into account. "Brokers will struggle to grow accounts by more than 10% this year," he declares. Except, perhaps, for Giles?