Consolidation the McManus way – Exclusive interview

Brendan McManus is loving it. No, he really is. After all these years in insurance - the highs, the lows, the lessons both good and bad, all the hard slogging, McManus shows no signs of slowing down.

The 58-year-old, looking tanned and fresh, says he’s never felt so good.

“It’s been a lot of fun. It’s been an absolute joy to me. The best in my career. I’ve absolutely loved it, every minute. There’s zero stress, and I think we are going to have our best years ahead of us,” he says.

Exactly what is ahead of PIB, is of keen interest to the market.

Ataraxia founder Stuart Randall says: “He’s done a really good job. He’s quietly gone about his business, picking out the good brokers. I think he’s put a really good group together, fair play to him.”

For today’s interview with Insurance Times, McManus is eager to talk and not shy from any questions including growth, people, an increasingly active market regulator and a future sale.

First off, a bit about McManus himself.

He spent 28 years at RSA in director and MD roles.

Then he moved over to broking, not always a successful shift for insurer people, but McManus has found his groove.

He spent five years leading Willis UK, three heading up Giles and, since 2015, he’s been chief executive of PIB.

Business lessons

McManus has worked alongside some of the biggest names in insurance such as RSA saviour Andy Haste, Willis’s flamboyant leader Joe Plumeri and consolidator king Chris Giles.

With all this experience, what are some of the big lessons he has learned and how’s it serving him today?

“I’m sure I made mistakes in my early days, but what I learned most, was to focus on the people.

“If you’ve got good people around you, and those people want to stay and work with you, then you keep your revenue and you grow.

“If you’ve got tight turnover of your best people, that inevitably impacts on the relationships with clients, you lost the revenue and you can’t grow. The big lesson for me in the early days of Willis was to focus on the people.

“That is something that I’ve brought into the business now. What our people proposition is and how we can make those people want to come here in the first place and stay here. So far, so good. It’s working.”

Another important lesson for McManus has been to focus on the right type of business.

“Giles was a great business. I loved Giles, so much so that I tried to buy it myself and it ended up going in a process to Gallagher. But I really loved that business, it was a great business. My key learning from Giles was that the more specialist the business, the better growth potential it had, particularly during the difficult economic headwinds, the credit crunch.”

PIB strategy

This brings us nicely on to PIB, which has snapped up some nice brand name businesses.

These include specialist personal lines brokers, independent brokers, Lloyd’s wholesalers and SME focused MGAs.

Most recently, PIB bought Lorica, its 13th acquisition in less than two years.

The money has come from private equity giant Carlyle, which acquired a major stake in December 2015.

There are some who privately believe PIB is in a dash to buy as many brokers as possible before the Carlyle fund expires.

But McManus bats away this notion.

“PIB is acquiring specialist firms and integrating them, as well as investing,” he says.

None of the brand names change to PIB, but McManus stresses that it is for good reason.

“Just because we don’t change the brands, it doesn’t mean we don’t integrate. We integrate all the finance processes, and I mean within the first quarter of acquiring the businesses. We integrate HR, we integrate technology, we integrate risk compliance.

“Now what we don’t do, is force people into placement zones or underwriting zones, or anything like that.

“So we leave people to run their business, to deal with their clients, get new clients and place the business in the market in a way they’ve done pretty traditionally.

“I think a mistake that has been made in the past is that they’ve forced people to use particular markets. The account execs feel uncomfortable about that and move on.

“They then take their clients with them and it impacts on the top line and bottom line of the broker they’ve left.

“My thesis is that we leave the brand in place, because, if people have been using that brand for 30 years, why disturb it? But we do integrate strongly behind the scenes.”

Conflicts of interest

PIB has bought both brokers and MGAs, so an independent placement strategy is crucial to remaining FCA compliant, especially in light of the Bluefin scandal.

The FCA fined Bluefin for pressuring its brokers to place business where the commissions and rewards were highest, instead of what was right for the customer.

But McManus believes as long as you are up front with the FCA, they are fine to work with.

The door is open to his office for any PIB employee who believes they are being unduly pressured.

“We put in a whistleblowing policy last year so that anybody who feels that they are being influenced not to do the right thing can blow the whistle and come straight to me.

“I believe this company has got a moral compass and if we do the right things by our clients, we’ll keep them. Keep the revenue, and then you’ve got the ability to grow.”

Whether it be through whistleblowing mechanism or shares for staff, keeping employees happy is important to McManus.

When Insurance Times suggests not everyone was entirely happy at Giles, with reports emerging at the time of some investors who didn’t get the expected return following the £233m sale to Gallagher in 2013, McManus is keen to put the record straight.

“It’s unfair to say that people didn’t get the return they thought they would get. They got the return that they were due to get. There were a couple of people that didn’t understand what they had in their deskdrawer, but the vast majority of people did understand it and actually, over the life of Giles, a lot of the senior people did very well and have nothing to complain about.”

At PIB, all shareholders are in the same class, and for those staff not owning shares, McManus is “working on something”.

“We have around 30 managers, investors, who have invested in the business. I’m one of them. One of the things that is really important to me is that we are all in the same share class. We all do well together and therefore we should collaborate with each other to generate better revenues and lower costs in the business,” he says.

No trade sale

So looking to the future, what’s next for PIB?

By spring this year, PIB will be at around £100m revenue. That would motor it up the Insurance Times Top 50 Brokers, from 28 to around 15th place.

PIB won’t stop there though. Expect more acquisitions and people hires.

“We can probably hire people who wouldn’t have come to us a couple of years ago because they didn’t believe the story necessarily, now people want to come and work here,” he says.

Some have speculated that PIB could be a good fit for Aon.

The global broker bought Henderson last year, showing an appetite for UK expansion.

McManus’s vision is clear though.

“We’ll exit to another financial investor, not a trade. That’s been our understanding with Carlyle right from the beginning. If you want evidence of that, they invested in a business in 2012 called EPIC, very similar business to ours and EPIC was sold by Carlyle to another financial investor last year. So there is precedent within Carlyle,” he says.

And what about McManus himself, is he going anywhere?

“I’m 58 years old, I could probably stop work but I don’t want to. I love the people. I love the social side of this business and I love the deal origination. I love everything about it.”

Deals, hires, growth, staff holding shares, winning over customers – it’s exciting times for PIB.

McManus is on a roll and having the time of his life.

Whoever was it who said insurance was boring? They should have definitely spoken first to McManus.