Daily Briefing: Friday - Is Giles past its best?

On the face of it, Giles appears to be going strong: this week it is rumoured to be on the hunt for Manchester broker CBG. But scratch beneath the surface, and there are big questions over this business.

The consolidator still has large debts and, worryingly, last year's revenue was flat and costs were up. There are also big questions over whether Giles has the scale for a flotation: it could become an illiquid stock with few investors interested in trading.

Narrowing options

The one route for Giles might be a transformational deal, but who is going to merge with it? Heath Lambert was snapped up by Gallagher, and Oval is off the menu because of potential culture clashes and management mismatches.

Stuck in a very difficult place, one option for Giles and its private equity backers Charterhouse is to open itself up for a trade sale. A megabroker like Marsh or Aon might be interested in taking on Giles to increase its SME footprint in the UK, especially if it can snap up the consolidator for a decent price.

Giles looked good when the economy was strong and the stock market ripe for an insurance broker flotation. But now the business is struggling and many doubt whether it will ever realise its dream of a successful flotation. How long is it before the predators smell blood?

Insurers 'Like' Facebook

Acromas used Facebook photos to help convict an insurance fraudster who claimed he was housebound but was snapped partying in Italy. Insurers are increasingly using social media to clamp down on fraud and, at present, there have been no challenges over privacy or data issues.

Facebook is especially good for stringing together friends who might be involved in ‘cash for crash’ car scams. What’s amazing about all these cases is how stupid people really are. Why would you commit fraud and leave yourself open on Facebook? Insurers should take full advantage.