The broker boss tells Insurance Times about his plans for strategic acquisitions as he aims to grow the business from £45m gross written premium to £200m in five years, following the firm’s recent management buyout
It all started a couple of years ago, when specialist commercial lines broker JM Glendinning recruited John Rastrick as its non-executive chairman.
The new hire was intended to help the broker with its next chapter of growth, and Rastrick had a background in private equity.
JM Glendinning’s group managing director Nick Houghton tells Insurance Times that he was “pleased to secure the future of the Glendinning family” in this way, despite the world going into meltdown with the ongoing Covid-19 pandemic.
Now the broker plans to make some strategic acquisitions to bolster its £45m gross written premium (GWP) to £200m in five years.
“In my view, we have a successful business and great footprint, but I like to reinvent it every three years,” he says.
A series of coincidences
An important reinvention took place last month, for example, when JM Glendinning completed its management buyout (MBO) of the business, with growth investor Synova Capital purchasing a majority stake.
Synova was looking for a platform and JM Glendinning fitted the bill. The broker aims to use this investment to continue its “stellar growth” by bringing in great people.
“It’s just a series of coincidences that bought us all together and we built it up from there,” Houghton says.
Johnson and Houghton met when the two worked at Towergate between 2006 and 2008.
Both Johnson and Cary have extensive experience in buying broking businesses.
Transferred ownership
The MBO will see the broker’s founders – the Glendinning family - bought out of the business.
“We have not sold out as such; we have transferred the ownership of the business to investors who want to invest in us,” Houghton says.
The JM Glendinning team will remain and all shareholders will keep their shares.
Originally, JM Glendinning was a family business, founded in 1972 by John Glendinning.
It began with just 28 staff and £10m GWP. Over the years, the broker transformed from a family business into a regional one, with Houghton joining the business in 2013.
He says: “The good thing about Synova is that they do not want to run our business. Over the past eight years the ownership has been spread amongst the senior team, it’s not just been family-owned and that all continues.”
In November, the broker celebrated 48 years in business.
Like-minded brokers
Speaking about acquisitions, Houghton says: “We will tell our story to the brokers out there that are thinking about their future. We want to buy brokers that have similar values, a similar outlook on life and an ambition to work with us.” For example, those in a good niche.
This set of values, Houghton says, is very much the broker’s recruitment philosophy also.
“It’s pretty straightforward, we are just on the lookout for like-minded individuals,” he says.
He believes that the insurance market is polarising - which presents opportunities for the business.
“We are sat right in between the global players and consolidators, and the smaller provincial brokers, and it feels like a lot of our peer group have sold out to trade. It doesn’t feel as busy in our airspace and we see that as an opportunity,” he adds.
Regulatory noise
One challenge arising in the industry at the moment, according to Houghton, is around successfully running a regulated business.
He says: “The noise that comes with running a regulated business – how do you use technology to the maximum? How do you go about dealing with regulatory responsibilities?
“It doesn’t matter whether you are a sole trader or [a global broker], the regulatory burden and the operational requirements are pretty much the same. Ultimately the noise stops a lot of businesses growing, but we have managed to.
“The biggest challenge for any insurance broking business is all the things you have to do in addition to winning and returning customers.”
In relation to Covid-19, Houghton says its true impact has not been felt yet, although the pandemic has forced all businesses to test their business continuity plans.
“I think it’s just reinforced how resilient insurance brokers really are, so that’s a big positive in my mind,” he adds.
Encouraging the next generation
Houghton would like the insurance sector to consider investing into local communities as “Covid has shown us how fragile life is”.
As local provincial businesses, he believes brokers have a responsibility to be part of local communities and that lots of firms already do this very well.
But, it is also about encouraging the next generation, Houghton says.
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