Markerstudy's broking arm to double in size after Capita buys

The acquisition of Capita’s high street broking businesses will double the gross written premium of Markerstudy’s retail broking arm to £150m.

The deal was approved by the FCA yesterday and will be completed tomorrow.

It covers Lancaster Insurance Services, BDML Connect, Delta Underwriting Agency and Hero Insurance Services.

Capita expects the sales and closure of a separate pension administration business to cost around £35m.

Markerstudy group underwriting director Gary Humphreys told Insurance Times that Capita’s insurance distribution arm “didn’t really get the level of attention” it deserved.

“I think there’s been a bit of a disconnect in the management structure because you’ve got Capita central management overseeing local management.

“There have been a number of changes in people at the top of the insurance distribution side and not really a clear focus and strategy on where those businesses are going,” he said.

Capita’s interim general insurance head Wayne Lewis departed in March this year after only six months in the job. Lewis’s predecessor Brent Escott also left after just six months in the job back in July 2012.

Markerstudy will be visiting the offices of the newly acquired businesses this week and talking to its 635 staff.

“So far staff have been very receptive to the fact they’ve been taken over by a company truly embedded in the same industry,” he added.

Operating expenses

Markerstudy’s first challenge will be reducing the loss-making businesses’ operating expenses, starting with its systems.

Humphreys said Markerstudy could halve its systems bill. The former Capita businesses use different systems including CDL and SSP, whereas Markerstudy’s other retail brokers use Open GI.

“We’re looking at what we can do to either rationalise the systems or potentially move them onto the same platform,” Humphreys said.

Markerstudy will also boost the underwriting capacity available to its niche brokers, including classic car broker Lancaster, by joining their panel of insurers.

Markerstudy already writes nearly £100m of specialist vehicle business, but does not currently write business through Lancaster because of systems constraints.  

“We had discussions with them, but it was a case of having to build stuff from scratch. The investment and time taken to get live was preventing them maximising their opportunities,” he said.

After sorting out its systems, Humphreys said Markerstudy could grow the businesses by at least 50%.

“Most of the businesses we’ve tended to acquire have been turnaround scenarios. We have a team internally who are very good at knowing the operational pressure points and where you can make the quick wins,” Humphreys added.

The integration will be overseen by head of retail Russell Bence and operations manager Mervyn Vaughan.

“Within the business there are good existing staff who, with the guidance of those guys, will be able to make a difference fairly quickly,” Humphreys added.