Erinaceous is runnning out of time

Long before troubled property group Erinaceous fired the starting gun to auction off its insurance division last month, city bars had been awash with speculation about its future.

The parent group had seldom been off the front of the business pages, with an array of stories focusing on fraud allegations, shareholder power, poor results and high profile departures.

During this period its insurance division, Erinaceous Insurance Services (EIS), had remained insulated from the strife, remaining a large and profitable part of the business. But while profitable, EIS has been quietly haemorrhaging staff and notably around 20 key personnel to the king of consolidators, Towergate.

This week, EIS executive chairman Leslie Goodman attempts to put the record straight (see pages 14-17). “A sale is the glamorous option,” he says. “But maybe now is not the right time. If a prospective buyer doesn’t meet our expectations, we won’t sell.”

But the problem for EIS is that it is beginning to run out of time. It’s shareholders are rapidly losing patience and the longer the saga drags on the more fears grow that the price for the division may decrease, which is a problematic scenario for its board looking to manage debts.

And then there is the issue of rivals swooping in for clients and staff alike. Goodman accepts that he just can’t sit back while the damage is inflicted by suitors and he says, tellingly, that he has “some ideas of his own” and that there will come a time when “we will take the fight to them”. But the question is how much longer can Goodman, and the board of Erinaceous, wait?

The options are there for all to see; Erinaceous could sell and sell quickly; reinvest profits with a view to turnaround or capitalise on any remaining goodwill from its banking investors and seek further investment to tackle the tricky obstacle course that is its way forward.

Whatever the decision it needs to be made quickly.