The recent successful Towergate-Folgate merger completes a momentous year for Peter Cullum, but he has a warning Andrew Holt reports.
Peter Cullum is a man on many missions. The executive chairman of the newly-created Towergate Partnership, merged from Towergate and Folgate, says the new group will look to forge better relationship standards between insurers and brokers.
"Adversarial relationships between carriers and brokers are nuts," he says. "That was part of the macho Eighties when you had a hard market, the carriers would beat the brokers up and then the softer market came and the brokers would get their revenge. So we go through this cyclical war zone.
"We are trying to break that. We have an obligation to work with insurers to make sure they get a decent return. Outside our industry what industry sees the manufacturer trying to screw the retailer?"
This is slightly ironic given the spats between Towergate and Zurich with the insurer telling Towergate clients not to do business with the broker. Only an apology from Zurich has prevented legal action.
But his missionary zeal goes further. He wants more growth for the Towergate Partnership, particularly through further acquisitions. "We want organic growth, but the aquisitional growth gets us where we want to be a lot quicker. I do expect us to be writing about £2bn of premium by the end of next year."
That is a steep rise from the current £1.2bn. "We only want to buy the best companies that fit with us. The expansion of the business over the last couple of years is not going to slow down. If anything it is going to start to accelerate, as we see some really good opportunities for the Towergate Partnership.
"I am not looking at a radical change, it will be more of the same, more of a model change emerging. We are looking to restructure the model of how we do our business."
This, he says, is not about distribution but more about managing the process. "It will be much more geared to how we manage the existing portfolios and the partnerships we have with our insurers."
His next big mission is buying-out the Royal Bank of Scotland (RBS) stake.
"We have agreed the terms of buying the Royal Bank of Scotland out. That is north of £100m.
"They are backing us as a co-lead on the refinancing. And we have four really high quality banks as part of the recapitalisation."
The four banks are RBS, HBOS, Lloyds TSB and Barclays.
But he plays down the possibility of a listing soon, while accepting in the long-run it is necessary.
"With RBS, the company is owned 100% by management and staff and we have no pressure to look for a listing. But that is not to say we will not.
"Cullum and Homer are not getting any younger, so we will look at some point for us to go non-executive, deliver an IPO and release some of our shares and create a new model for the younger guys and girls to share in the wealth gain.
"It will be driven by the ageing factor of Cullum and Homer. We are old fashioned insurance blokes."
He also wants to push how Towergate offers an all-encompassing offering.
"There is so much duplication today, we believe we can help to work with insurers to change the present model.
"We have a much more educated consumer than we did a decade ago because the level of service elsewhere has increased considerably. We have to make sure that we deliver."
One of the reasons Cullum is so enthusiastic about future plans is that the merger between Towergate and Folgate has gone so well.
"The merger has gone as well as could have dreamed. I don't want to be seen understating matters, but everything has gone like clockwork internally."
Only one redundancy has resulted and that was on the IT side as there was two IT directors and only one was needed.
But Cullum says the IT aspects will continue to be another mission. "We have a myriad of different systems and we think that one size does not fit all.
"So we do not have this dream of one system serving all businesses because we have such diverse businesses that a complex system works for one business and a simple one works for another."
This situation will be looked at however and be "rationalised" over the next 18 months.
"We are not going to spend millions. It is really about encouraging existing customers to trade with us electronically. It cuts costs and is more efficient.
"Our industry along with banking is the one that stands out for electronic trading. But when it comes to e-trading we as an industry are slow off the mark."
And he has a warning: "I do believe that many small brokers will be seriously threatened if they fail to create this sort of platform that the modern customer going forward will be demanding."
Opposition to change
One of the things the insurance industry often suffers from is the opposition to change. "Yes we are slow to change within our industry."
And he says that people don't fully appreciate the work the Towergate Partnership does with other brokers.
"We have time and energy listening to the brokers and being the broker's friend. We have specialist products and have great relationships."
Cullum also has an interesting take on the FSA. "One thing I fear within financial services, is the FSA has almost eliminated independent financial advice. It is all tied agencies and networks, and I am not sure that is what it intended."
That is a mission Cullum didn't need to undertake himself.