Towergate is understood to be in discussions to buy motor specialist broker Allen & Allen.

It is believed that the discussions for the acquisition of the Middlesex-based broker are at an early stage.

The group, which specialises in non-standard motor insurance, has an annual premium income of more than £80m and would be a sizeable acquisition for Towergate.

According to the latest figures filed at Companies House, Allen & Allen reported brokerage of £12.8m in 2005. Pre-tax profit was £149,900.

This could see an asking price of at least £22.4m and potentially more than £30m, depending on the multiple of brokerage used.

Multiples of between 1.75 and 2.5 times brokerage are commonplace – although some recent acquisitions are thought to have attracted higher valuations.

With the exception of last month’s Open International acquisition, Towergate’s largest broker buy this year is Hayward Aviation, which controls £75m in premiums.

At the time of the Hayward purchase, Towergate chief executive Andy Homer said the company was looking to expand into niche areas.

Allen & Allen would fit with that strategy. The group’s companies have a range of schemes for standard and non-standard covers, including young drivers and those with convictions, as well as insurance for modified and performance vehicles.

The broker also has a number of online distribution brands. Allen & Allen Group brands include Hyperformance, BrokerKing.co.uk, QuoteA.co.uk and Prestige.

Its website says: “The group is owned solely by its directors, employs almost 400 staff and is dedicated to utilising the latest technologies to deliver cheaper insurance premiums to its customer base.”

Towergate declined to comment.

As Insurance Times went to press Allen & Allen was unavailable for comment.

Homer affirms Zurich panel place

Towergate chief executive Andy Homer has insisted that Zurich’s position on Countrywide’s insurer panel is not under threat following the acquisition of Open International.
Homer said: “We have a long relationship with them [Zurich]. I hope that will continue.” He added that Towergate would be meeting all members of the Countrywide panel in the coming weeks.
Zurich and Towergate have had a rocky relationship in recent years. In 2004, Zurich cancelled Towergate’s (then Folgate) commercial agency amid allegations that the insurer planned to use other brokers to attack its business.
At the time, Homer accused Zurich of attempting to "steal" Folgate’s business.
Homer has repeatedly stressed that although it wished to grow its influence with the Countrywide Network, Towergate and Open International would remain as distinctly separate businesses.
A Zurich spokesman said: “We look forward to continuing to develop our excellent relationship with Countrywide and Open GI.”

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