With no chance of a fortunes U-turn, Oxygen is quitting at the right time and shedding its businesses one by one. Will other brokers follow?

The future of broker Oxygen became clear late yesterday afternoon when an announcement signalled its intention to sell the remaining assets of the business. The news came as Oxygen confirmed the sale of its entertainment broking business Robertson Taylor.

All that leaves Oxygen with is its UK corporate risks division, of which an announcement is expected soon. Sources close to the business have identified Gallagher International as the buyer of that part of the business, which is based in Leeds.

Oxygen is no stranger to selling businesses and has a history of dealing with Gallagher. It’s 21-strong London market team transferred to Gallagher in August and back in 2008 Gallagher bought Oxygen’s underwriting agency, Oxygen Insurance Management. Gallagher’s move for Oxygen Corporate Risks would make sense as it would fit nicely with its Gallagher Heath business, which also has an operation in Leeds.

In a statement yesterday Oxygen chief executive Nigel Barton said the intention had been to sell the group as a whole. But, with niche businesses such as Robertson Taylor, which was rocked by the exit of its chief executive and death of its founder earlier this year, it proved an impossible mission to find one single buyer.

So why now for Oxygen? The company, like many brokers, has gone through a torrid time in recent years. The company admitted in its 2010 accounts that it had been a “very difficult year” as revenue dropped 5% to £17.9m. Despite the disappointing financial results, the company found itself in 47th position in this year’s Insurance Times top 50 brokers.

But the forecast for continued tough trading environments in the UK and US markets, coupled with the financial ill health of the company, eventually gave Oxygen no choice but to go down the route of effectively winding up the business, as there seemed little hope of turning the business around. 

This way the company can attempt to pay back its investors, recover losses and avoid any potential redundancy costs.

In the market, broker bosses have applauded the company for recognising the situation. “I think it’s a very sensible move,” said one UK broker chief executive. “They have realised that for whatever reason the opportunities in the marketplace have disappeared. I think it is a good deal.”

The question now is will other struggling brokers follow suit? Oxygen has played its ‘get out of jail free’ card and this could well be the start of a trend.

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