Thompson Heath & Bond is a fast growing broker that covers half the Formula One grid and a large chunk of the equestrian world Vic Thompson tells Caroline Jordan how the firm has become a big niche player.
Vic Thompson, founder and chief executive of Thompson Heath & Bond, has been in the Lloyd's market a long time - the business was established in 1968. While not afraid to challenge its practices, one factor remains unchanged; he remains one of its strongest supporters.For more than 20 years he has been a Lloyd's Name, something he says he is happy to stick with and points out he prudently avoided the high risk syndicates which had massive asbestos exposure. And, in terms of his company, he explains: "More than half of the business we do is placed though Lloyd's, although you now also have to see it in wider terms as the London market."In those early days, there was a real sense of underwriters and brokers trying to achieve things in partnership. This is less evident now, but we do still need to pull together."From setting up as a sole trader, Thompson is now at the helm of a business that employs 420 people, and is one of the UK's fastest growing brokers.With a group income of more than £21m, it has recently expanded at a significant rate following a number of major acquisitions. Thompson says there are no plans to the biggest though."We're interested in niches, not just trying to take on the other nationals. Where we specialise, we are often bigger than those firms anyway."The firm started off as being a personal lines player, but has moved away from this. It now focuses on a number of specialist areas for the broker market in the UK and US. "We could see no sense in staying in motor when the market is so commoditised and recently pulled out this, but we do still have a successful high net worth book of business, which is placed largely to service commercial clients," he comments.He adds he does not see a big role for Lloyd's as a provider of personal lines. "The exception will be in brokers who can manage big schemes on a delegated authority basis."While broadly supporting the Lloyd's franchise board and the tighter discipline this has introduced across the market, Thompson does not want to see this go too far and says there needs to be realism."Lloyd's is charging higher rates in some areas than other insurers. They could still reduce these in some cases and continue to make big profits. But, the ways things are going, there is a risk they could damage or even lose some long-term relationships. There has to be a balance."
Strong controlWhere he would like to see Lloyd's management exercise its authority is in back office systems. "Take the electronic placing system, this involved a lot of time and money for brokers and our software was set up for this, only for it not to be used by a number of Lloyd's underwriters. It later fell by the wayside."He says he supports the idea of deadlines and strong control at Lloyd's."It is good that reform is happening and we need to see high standards of compliance and better administration. But, there have also been companies moving out of the market, establishing in Bermuda and Gibraltar, for example."Change is a double edge sword, but there is no doubt we will continue to place high levels of business with Lloyd's."Following acquisitions, THB has since built strong relationships with a number of composites, including Zurich and AXA."Zurich had a long standing relationship with Rarrigini & Rosso and our decision to buy was partly based on this. It is going well and we are looking to build on both the broking side and the risk management consultancy services we offer," he says. Rarrigini & Rosso is a fleet specialist and runs a risk management division alongside the broking arm.Thompson says acquisitions are made largely on the basis of the existing people and that all staff remained once the deal was made - apart from founder Julie Rodilosso and her husband.A further highly successful acquisition was broker TL Clowes - now renamed THB Clowes - a mainly commercial lines firm which is a leading motor sport specialist "We're a market leader here, outstripping other nationals - we insure half the Formula One grid," he says.THB is also big in rally - it bought Egger Lawson in 2002 a motor sport specialist primarily trading as Competition Car Insurance, in 2002. THB now operates three motor sport insurance centres in London, Leamington Spa and Nottingham.A further important buy was British Equestrian Insurance Brokers (BEIB), a Lloyd's broker active in the UK and overseas. The business has a £2m turnover and employs 40 people.BEIB also has a 50% interest in US broker, Equisure, which provides insurance programmes primarily to equine affinity groups in the US and, in particular, to members of the USA Equestrian association. "Again it was a good team which encouraged us to buy the business and their reputation in the market," he says.
Corporate buysThere are further buys planned, but Thompson says: "We're certainly not in the same league as Folgate. In 2004, we'll be concentrating on a small number of niches and be looking to grow our existing business - we have a couple of corporate buys lined up."And, he adds the emphasis this year will be on growing the company's wholesale business. THB already has an agency base of some 1,000 brokers throughout the UK.Last year, Thompson was presented with the best newcomer award for THB when the company won the category at the AIM Awards, a year after its float.THB joined AIM in October 2002 and at the time of the float, announced this would raise in the region of £6m. While creating new pressures in terms of the expectations of investors, floating has also brought benefits and means staff have access to valuable option schemes."It has allowed us to press ahead and achieve more. When you reach a certain size, a flotation was the best way of securing long term growth."