Bluefin could make six acquisitions in 2013

Broking group Bluefin could acquire up to six companies in 2013, according to chief executive Stuart Reid (pictured).

Speaking to Insurance Times following the release of Bluefin’s 2012 results, Reid said the company would make at least three acquisitions this year, having made none in 2012.

He said: “We will be successful this year. We have got two on the go at the moment that are at advanced stages and another one coming up on the rails.”

Reid added that Bluefin was seeking brokers with revenues of up to £2m, which equates to gross written premium of £10m assuming average commission rates of 20%.

But Reid added: “Acquisitions for us are a nice to have, not a must-have.”

Reid’s comments come as Bluefin posted a 27.5% increase in earnings before interest, tax, depreciation and amortisation in 2012 to £22.7m (2011: £17.8m).

The AXA-owned broker’s profit before tax was up 54.3% to £17.9m (2011: £11.6m).

The improvements came despite a 3.2% drop in revenue, caused in part by abolishing the franchisee model in its Business Partner Services (BPS) network division, falling motor business volumes caused by insurer rate increases, and the loss of business when a team of people departed to join rival broker Wentworth Alexander.

Operational efficiencies

Reid attributed his company’s profit growth to “operational efficiencies”. He stressed that this was not just cost cutting.

“It is getting the best bang for our buck as a business. We have had a root and branch review across a whole range of activities,” he said.

Bluefin chief financial officer Robert Organ added that the improvement was also caused by Bluefin’s choice of business. He said: “It is also focusing on the profitable parts of the business and making sure we play in the profitable spaces rather than the marginal or loss-making parts of the value chain.”

Reid said all areas of Bluefin except personal lines grew their profit contributions to the group. Personal lines was held back by lower motor volumes and increased investment in the business. But Reid said: “It is still a highly profitable part of our business.”

In particular, the BPS network division, which suffered a setback in 2011 when its profit contribution dropped 47%, has increased its profit contribution by 23% in 2012.

The 2011 drop was caused by the restructuring of the network. Reid said the increased profit contribution showed that the restructuring had paid off.

He said: “We exited a significant part of that last year. We said we had taken the pain in the network before anybody else. That is evidenced in the numbers.”