Halpin is eyeing commercial buys ‘that fit with the business model’ while turnover rises 13%
Broking group Swinton is looking for more commercial lines acquisitions now its 2009 purchase of Equity Insurance Brokers has bedded in, according to chief executive Peter Halpin.
Halpin said the company has spent a year consolidating its commercial lines acquisitions, including the commercial business of Equity.
Halpin was commenting as Swinton posted a drop in full-year profit to £21.8m for the year to 30 December 2009, compared with £28.9m in 2008. Operating profit before share scheme and incentive charges dropped 31% to £36.4m from £53.2m.
The company has implemented a common platform, Acturis, at its commercial operations, Halpin said, giving them all a consistent business model. “Now we have got through that phase, we are beginning to revisit the opportunities to acquire commercial businesses in line with our plans to try to grow our commercial operation.”
He said, however, that Swinton will be selective about its purchases. “They need to fit into our business model and we will only look at businesses that we believe to be a good fit,” Halpin said.
Swinton will also continue looking for acquisition opportunities in personal lines. Since buying Equity, the company has been making small personal lines acquisitions. This has included books for business from commercial lines brokers looking to exit personal business, and smaller local brokers.
Halpin said: “Over the last 10 years we have undertaken between 25-40 acquisitions a year, and we have been towards the bottom of that range over the last couple of years.”
He said that acquisition numbers had been subdued by prices falling below what sellers were willing to accept. “I think somewhere in the region of 25 to 30 personal lines acquisitions is what we would expect over the next 12 months or so.”
Swinton’s financial statement said that market conditions in 2009 were challenging, and that a lack of consumer confidence, caused by the financial downturn, had affected renewal and cancellation rates.
One-off costs relating to the Equity acquisition, plus a fine and remedial action imposed on Swinton by the FSA in October 2009 in relation to the broker’s mis-selling of single-premium payment protection insurance (PPI), also took their toll.
However, Halpin pointed to the firm’s 13% increase in turnover to £263.2m from £233.8m, the increase in branches to 603 in 2009 from 487 in 2008, and the 31% increase in the number of live policies to 3.8 million from 2.9 million as positive signs of Swinton’s health.
Halpin said: “To see the business grow to the extent it has done shows a good performance.
He added: “This is especially so if you think about the trading environment, where there has been the worst recession since the war, together with the particular challenges within the insurance market through 2009 and into 2010.”