Merger creates £150m war chest

The two divisions of Peter Cullum's insurance empire, Towergate and Folgate, have merged creating a £150m war chest for acquisitions.

Towergate Underwriting, the schemes business created by Cullum in 1997, has been merged with Folgate Partnerships, a national network of wholly-owned brokers created in 2002. The resulting holding company, to be known as Towergate Partnerships, will have more than 1.5 million policyholders.

Andy Homer, who will be chief executive of the combined group, said: "We found that a lot of the businesses we acquired at Folgate had schemes more suitable for Towergate and some of the business coming to Towergate was more suited to Folgate. It seemed sensible to put them both together."

Cullum will chair the combined group, with Homer as chief executive and David Torrance as chief financial officer. Members of the executive board, which Cullum and Homer regard as their successors, include group managing director Kenny Mciver, acquisition director Tony Proverbs, finance director Tim Philip and executive director Tim Johnson (who will look after the southern region).

Homer's former AXA colleague, Clive Nathan, will be responsible for the northern area and is expected to be promoted to the board soon.

Towergate adjusted its debt structure last year and its venture capital backers, including Royal Bank of Scotland, were looking to get a return on their investment in the next 18 months.

Cullum said merging the two businesses was not a sign that there was no appetite for a future float or equity sale.

"We felt that a float of Towergate would prejudice the potential sale or flotation of Folgate. If it went well, would investors be willing to follow a similar sale just a couple of years later or if it went poorly, could it have stopped our plans for Folgate?" Cullum said.

The merger combines Towergate's £299m gross written premium (GWP) and 684 staff, with Folgate's £788m GWP and 1,334 staff, giving the combined group control of almost £1.1bn in premiums.