Canopius seeking more UK broker buys

Lloyd’s insurer Canopius is looking for bolt-on broker acquisitions to grow its UK retail business, says executive chairman Michael Watson.

However, the company  will not do a transformational deal in the UK retail market and is aiming to keep the UK retail portion of its book below 50% of the total.It currently stands at arond 25%.

Canopius bought UK retail brokers K. Drewe and Look last year, and is looking to do similar in 2012.

“In addition to the couple that we did buy we looked at one or two others last year and no doubt we will look at one or two this year and maybe a couple of those will come home,” Watson told Insurance Times. “Part of the UK retail strategy is about pushing  a little further down the distribution chain and closely integrating that with our underwriting capabilities.“

However, he stressed that Canopius would not be making “a major splurge” on UK brokers.

Watson also revealed that Canopius has the firepower to do a more transformational acquisition, which would require raising equity capital.

“We believe through continuing conversations that our shareholders and others that we have access to equity capital to enable us to fund a rather bigger acquisition if the right one happens to cross our path,” he said.

However he asserted that the company is not looking to make such a transformational acquisition in UK retail, preferring instead to focus on specialty Lloyd’s insurance and reinsurance.

“It would be relatively unlikely that you would see us make a big splash by trying to buy what, for us, would be a big UK retail book of business,” Watson said, hinting strongly  that his company is not in the running to buy the UK retail book of fellow Lloyd’s insurer Brit, which is currently for sale.

Canopius is also looking to replace members of the UK homeowner team that defected to broking firm Gallagher’s managing general agency, OIM Underwriting. The employees have given their notice, but still working at Canopius.

“We are not in any way withdrawing from [the UK homeowners’] marketplace,” Watson said. “At some point those staff will move on to their new homes and by that time we hope to have secured the services of people to succeed them who will help us develop alternative and additional sources of business.”