2010 may bring a renewed entrepreneurial spirit to the industry

This week, we report that Oval has agreed to sell two of its businesses back to the original vendors. It’s happy, the vendors are happy, and nobody has to go to court. The nation’s legal profession might not be too thrilled, but on the face of it, everyone else is a winner.

As many of the restrictive covenants imposed in the heyday of consolidation expire, the question will be posed across the country: what do you do when it hasn’t quite worked out? Previously, the solution has usually been for the original vendor to walk, taking colleagues and accounts with him. The consolidator then sues, and the whole mess works out in favour of one or the other. The more mature and professional approach provides an excellent model that Oval’s peers will be hoping they can follow.

It also hints at economic optimism and the early days of a new generation of entrepreneurs. If one-time vendors are happy to take their money out of the bank and put it back into their businesses, they must be fairly confident. Meanwhile, anecdotal evidence suggests the FSA has a months-long waiting list for approvals for new brokers. As the consolidators get their houses in order, 2010 might also see smaller, entrepreneur-led businesses flourish – whether for the first or second time around.

No longer on a high street near you

Reports that Peter Wood is trying to buy back Lloyds Banking Group’s 70% stake in Esure are just the latest in a series of stories that have seen high street banks depart the Top 50 Insurers. If Lloyds does sell the joint venture, it will retain its own significant insurance operations, but will slip down the rankings from its current number 10. As will RBS, now number three, when it sells or floats its insurance brands.

HSBC Holdings has already put its motor book into run-off, sold part of its broking business and is widely rumoured to be in talks to sell the rest to Marsh. Meanwhile, Fortis is officially divorced from the banking group that was its parent company, and is preparing to rebrand.

Given the seismic changes in the financial landscape, such a shift is hardly surprising. And certainly, in the cases of RBS and Lloyds at least, it is prompted by external pressures, rather than an admission that the bancassurance model does not work. But it does open up gaps in the ownership structures at the top of the market, raising speculation that M&A or hefty injections of private and/or foreign capital could be on the cards early in the new year. IT