What does the acquisition mean for other networks in the market?
Ink Underwriting’s move to snap up Westinsure has raised eyebrows in the market. The underwriting agency, owned by consolidator Giles, was not always seen as the obvious candidate to take over the South West-based network, which is understood to have been seeking opportunities for some time.
But what the deal does show is that there is appetite in the market for the larger players to own networks as a distribution channel.
Towergate’s acquisition of the Broker Network back in 2007 was the first instance of network consolidation, which has given the broker the foothold to launch a dedicated network division and to create synergies with other parts of the business.
So what does that mean for other networks in the market?
Cobra has been a target in the past and has been tipped by many on the broking scene as the next network that could fall into the hands of consolidators.
The listed broking group admits it has turned down approaches in the past, including one it was forced to go public with back in 2008, although that suitor still remains unknown.
Two years ago, Giles chief executive Chris Giles said that he might consider setting up his own broker network after being touted as the mystery bidder for Cobra, which he denied.
Now he has it in the shape of Westinsure under the Ink umbrella, could this be the platform he needs to launch a bid for Cobra? Sources close to Ink say the business is keen to grow its newly formed network division which could mean further acquisitions.
Cobra chief executive Steve Burrows admits the group is not actively looking to sell the business, but couldn’t rule out a sale if it was tempted by a big offer. He’s also adamant that the business would have to be sold as a whole.
“We would not sell the network in isolation. If we were for sale, we would have to sell the whole lot,” he said.
The company has a number of divisions, including an underwriting arm and a Lloyd’s broker. Burrows says that around 60% of its Lloyd’s business is placed through network members, making it near impossible to split the businesses up.
“If we sold the network our Lloyd’s business would suffer,” he said. “We don’t have a long-term future goal to selling. If someone came along with an offer we would consider it.”
Exciting times for networks
There could be some interesting months ahead in the network arena. It has been shaken up by the Westinsure deal and, with around 10 players in the market all fighting over the same business, the next major move will not be far off. Many have sat idle for too long, and some are still finding their feet while others take advantage.
Inks plans for Westinsure will also create a lot of interest, not least for its UK-wide membership base. Westinsure chief executive Max Hardman said in a recent note to brokers that insurer negotiations for 2011 will take place soon. There’s likely to be some serious questions asked by its existing insurer partners about how its new owners will take the business forward.