Weekly briefing: 8-14 July - Boundless ambition

So Hastings is going to float in January for £500m. Really? Seems a tad optimistic. It’s difficult to know the exact structure of the company – many different accounts make up the firm – but let’s say it floats Hastings Insurance Services Ltd, trading as Hastings Direct. Let’s be generous and use EBITDA as a metric, which is expected to hit £20m this year. That means the company will float for 25 times earnings, not factoring in debt, goodwill and amortisation. That’s sky-high stuff, equivalent to the miracle that is Admiral. Or another measure: it's twice the size in market capitalisation of Lloyd’s insurer Novae, which pulled in £35m in pre-tax profits last year.

When Grant Ellis successfully floated Broker Network, his biggest lesson, as he admits, was too "underpromise, but overperform". That way, the City wasn’t expecting much but got excited when results performed strongly. Hastings seems doing the exact opposite.

Furthermore, Ellis floated in 2007, during the boom years. Hastings will be floating against a backdrop of a stagnant economy labouring with a depressed High Street, a potential Eurozone crisis and flurry of poorly performing flotations. Investors will be asking: what is unique about this business? What’s its story? Where’s it going? With just six months to go until the proposed IPO, Hastings still has a lot of questions to answer. Good luck.

No ordinary Joe

There was plenty of excitement this week when we revealed our interview with Henderson Insurance Brokers chief executive Joe Henderson. The broker has grown in stature in the market in recent years owing to its rapid growth (it ended up in 44th position in the Insurance Times top 50 brokers table last year).

Henderson has kept a low profile, however, choosing not to court press attention like some of his larger rivals. In this rare interview, he details the next steps for the broker, the most eye-catching of which is his ambition to merge the business with another broker in the next year. His views on big market issues are not to be missed either, in our online exclusive: ‘Talking heads’.

Blanc bags Carruthers

Just when it seemed Amanda Blanc had played all her cards, she shocked the market with another big appointment. Less than 24 hours after we revealed that Towergate’s group operations director Max Carruthers had recently left the business, Blanc announced to the market that he was in fact to join her growing leadership team at AXA Commercial as chief operating officer.

It’s a big coup for Blanc, but a loss to Towergate. Carruthers had been in the role for almost six years and was established alongside other members of the consolidator’s executive management team, including Clive Nathan and Tim Johnson. Is that the end of Blanc’s rebuilding or are there more surprises to come?

Extending Bridge

Our latest broker briefing takes a look inside Manchester-based Bridge Insurance Brokers. Just a week after it announced it had opened its first office outside of the North West, in London, chairman Roger Potts talked about his role within the ambitious company since joining from Willis, and its plans for growth, including some potential acquisitions.

Giles eyes CBG

Staying in Manchester, and today it emerged that Giles has given CBG - the listed broking group that we recently reported was up for sale - the once over. Giles has been mooted as the favourite to snap up the business, but could still face competition from the likes of Towergate, which returned to the acquisition trail earlier this year.

A Bright idea

Broking group Brightside is taking an unorthodox approach to expanding its insurer panel, it emerged on Tuesday. Two of the firm’s three co-founders – chief executive Arron Banks and chief financial officer Paul Chase-Gardener – are both making personal investments in an anonymous insurance company in a bid to secure further capacity for Brightside’s growth.

To fund his investment, Banks sold eight million Brightside shares (10% of his total holding) at 25p a share. Presuming he pours the entire £2m proceeds into the insurer, and Chase-Gardener matches it, that's a fairly sizeable investment. Who is the lucky insurer?

Despite the transaction, Banks remains Brightside’s biggest single shareholder, with a 15.2% stake (it was 17% before the transaction). Brightside is not the only broker making investments. US wholesale broking house AmWINS is looking to take out Lloyd’s broker THB.

Self-funded initiatives

DIY has been a strong theme in insurance news this week. Tuesday saw the launch of a new police unit to tackle insurance fraud, which will be funded by an ABI levy on insurers.

And the industry could be asked to put its hand in its pocket again, under ABI proposal for a new risk pool mechanism to help those living in flood-prone areas, which was revealed in this week’s Insurance Times. Under the proposal, which is due to be discussed at a government-convened flood summit next week, householders and small businesses in high flood-risk areas would pay a premium up to a certain level. Above and beyond this “affordable” figure, the rest of the premium would be covered by a central pool to be funded by an industry levy.

Another levy is bound to be controversial, especially for those insurers that are relatively unexposed to flood risks, but it looks like the best bet for maintaining the UK’s tradition of ensuring widespread access to insurance for communities in flood risk localities.

Gallagher guns for the regions

There’s no stopping the Gallagher Heath juggernaut as it steams into the regions. This week it raided Willis to recruit a team of four for the Birmingham office. It tells you something when the megabroker is losing staff to a supposedly smaller rival. Account executives at Heath Gallagher can feel like they’re on a level pegging with the megabrokers of Aon, Marsh and Willis when they bid for business.

What’s also interesting about the raid is that it looks like Patrick Gallagher, managing director of worldwide property and casualty, is set to take an active interest in helping Gallagher Heath dominate the regions. Gallagher, son of the group's chairman, is being groomed to one day take over the business, and he’s learning to cut his teeth in the competitive UK market. There’ll be plenty of people wanting to join a firm that is certainly on the up.