Norwich Union (NU) will underwrite a third of Giles Insurance’s business following its purchase of a stake in the broker. This could amount to an annual £100m in premium by 2009.
Giles confirmed this week that it had sold a 7.5% stake to NU for £5.2m, as revealed by Insurance Times (News, 13 September).
The broker’s chief executive, Chris Giles, said that although the deal would not see Giles lose its status as an independent broker, it would see the amount business placed with NU increase significantly.
He said: “We aim to give NU a third of our book of business over the next two years – £100m by 2009 would not be inappropriate.”
Giles is aiming to grow to £300m in annual premium income by 2009, principally through acquisition. The business currently controls £160m in annual premium.
The company already has a strong alignment with NU through solus deals on small commercial and personal lines business.
NU will now become the major capacity provider for Giles’ recently acquired underwriting agency Ink.
Ink currently produces £13m in premium, with Faraday and Oxygen its two largest capacity providers.
Giles said Oxygen had now been axed from the Ink panel and NU positioned as the lead underwriter. “The aim is to consolidate the panel with NU becoming the largest capacity provider.”
Giles said putting NU on the Ink panel was part of the investment deal.
He also said it was the company’s strategy to protect NU business.
“We intend to make 12 decent sized acquisitions this year with substantial NU accounts. NU is guaranteed that we will maintain those accounts [with it].”
NUs director of trading Janice Deakin will take a seat on the Giles board.
Private equity house Gresham has also bought an additional 7.5%% stake in Giles for £5.2m, taking its shareholding to 41%.
Giles said the sale of shares to NU and Gresham would not raise money for acquisitions. The sale was in effect a share disposal by existing shareholders.
NU intermediary business director John Kitson said: “The deal is a symbol of support for independent brokers. Who knows, we may do some more in the coming months.” Kitson denied the deal was to protect the insurer’s market share.
Giles poised for Â£50m acquisitions
Giles Insurance is set to make four acquisitions by the end of October adding Â£50m to its premium income.
The purchases would take Gilesâ€™ controlled premium to Â£210m. The broker is seeking to grow to Â£300m GWP by 2009 with a string of acquisitions before floating on the stock exchange.
The company is expecting to unveil 12 acquisitions within the coming year.
The brokerâ€™s chief executive, Chris GIles, said the firm had raised Â£50m in bank debt to fund its acquisition drive. It had chosen not to raise money from its private equity backer, Gresham, to avoid the risk of having to give it more equity in the business.
Meanwhile, Hazel McIntyre, of Royal Bank Private Equity, is to join Giles Insurance as M&A director.
Sarah Lyons has joined Giles from HBOS as operations director.
Lyons fills the vacancy left by Bob Screen who left the broker in April after just three months in the job.