Market surprised by ex-NU chief's move to consolidator giant
Norwich Union (NU) executive chairman Patrick Snowball is to join Towergate as deputy chairman to spearhead its growth into the IFA sector.
The news came as Towergate posted earnings of £94.4m in 2006 and gross written premiums of £1.5bn. It also outlined plans to shift its acquisition strategy to the independent financial adviser (IFA) market after admitting further growth in the general insurance division was limited.
Executive chairman Peter Cullum said: "There are at least 3,500 independent brokers [IFAs] in the UK market. Of that number, 600 will not meet the FSA solvency requirement rules which come into play in 2008. It is not a saturated market yet. We are placing our focus on those 600."
Insurance Times revealed Towergate's plans to enter the IFA market last year, after the broking giant completed a £250m financing deal with HBOS and Lloyd's TSB (News, 7 December).
Snowball's move to Towergate has surprised the market. One leading broker said: "We all expected Patrick to move on because he was overlooked for the top job in favour of Andrew Moss. It was surprising that he has gone to Towergate, this is a massive coup for them."
Snowball, who was at NU since 1989, was seen as the front runner to succeed Richard Harvey when he stands down as Aviva chief executive later this year. But to the surprise of many the position was handed to Andrew Moss, the financial director.
Insurance Times understands that Towergate executive chairman Peter Cullum had long courted Snowball and, when the fall-out with Aviva occurred, saw the opportunity to appoint him.
Sources are now speculating that the broker is gearing up for a flotation which will see Cullum retire and group chief executive Andy Homer leave the company.
A Towergate spokesman responded: "As we say, never say never. It isn't going to be tomorrow though."
Another source said Towergate was "launching a huge charm offensive" to bring the market back onside following AXA's string of broker acquisitions.
Towergate's earnings for 2006 rose 51% from £62.7m in 2005. Net income was £243.4m, an increase of 40% on 2005.
Total sales were £1.1bn GWP, while the annualised GWP across the whole Towergate Group rose 20% to £1.5bn, compared to £1.25bn in 2005.
Towergate acquired 16 intermediaries in 2006 controlling annual premiums of over £400m.
Cullum said the cost of broker acquisitions had risen with the "average multiple up 25%". But broker income had decreased due to the softening market compared to more favourable rates 12 months ago.
