Broker briefing: Pavey Group is looking to buy

Name of broker: Pavey Group

Office locations and number of staff: five offices in the south west, about 80 staff

GWP controlled: £17m

Major clients: commercial and SME

Most recent results: Michael Pavey 2008 operating profit, £169,336 (down 37% from £267,496 in 2007); Michael Pavey Financial Services 2008 operating profit, £131,490 (down 27% from £179,918 in 2007)

Senior management: chairman Michael Pavey; Pavey Group managing director Graham Brown; Pavey Financial Services managing director Malcolm Swift

Pavey Group was founded by Michael Pavey as an independent provincial broker in Torquay about 40 years ago.

Pavey, now chairman of the general insurance side of the broker, started his business with a focus on insurance for leisure industries in the surrounding areas, but it has since expanded into commercial lines.

Twenty years ago, Pavey was joined by Malcolm Swift, who set up sister company Pavey Financial Services to provide financial advice.

The group now operates from offices in Exeter, Torquay, Teignmouth and Totnes. The broker employs about 80 staff and controls a GWP of some £17m. It handles about 80% commercial lines, and the personal lines division is mainly run from Pavey’s offices in Totnes and Teignmouth.

Pavey managing director Graham Brown operates from the Torquay office, while Paul Smale is director of the Exeter office, and the Totnes and Teignmouth office is led by director Ray Illingworth. Graham Howe is finance director.

The broker deals with businesses ranging from small tradesman to companies with turnovers in excess of £300m. Its biggest client is the National Trust, for whom Pavey runs the property, liability and motor programmes for England, Northern Ireland and Wales.

Brown says Pavey is keen to take on more brokers. Pavey sold its shares in broker network Westinsure to Ink last year and plans to use the funds for acquisitions. It is interested in buying teams of people and entire brokerages.

Brown said the broker would be happy to expand into the north and east of the country, but would otherwise continue expansion in the west country.

Pavey’s most recent acquisition was the general insurance side of brokerage RK Shipman, which Pavey bought out last year, taking three staff.

The biggest headaches for the broker have been the continued soft market and tough competition, particularly for the larger end of its SME business.

Brown says: “We’ve had 8% organic growth this year, but it’s hard work when 90% of your income is under pressure.”

Pavey has also experienced growing competition from banks selling insurance. Brown adds: “The banks are quoting for anything and everything.”

However, he says the firm’s greatest strength is that nothing is outsourced and the firm offers a one-stop shop to customers.

Pavey often crosses paths with other regional brokers, such as WPS in Plymouth, as well as consolidators Oval, Towergate and Giles, but Brown sees Jelf as the most competitive of the large brokers in the area.