Insurers take stands on broker ownership

Allianz has upped its stake in Manchester broker CBG to 5.6%.

The insurer said it believes that this type of support is preferable to a broker ownership strategy, such as that pursued by others in the market.

Simon McGinn, Trading Director at Allianz Commercial said: “The share acquisition is entirely in line with our strategy of supporting a thriving independent commercial broker market."

The move follows a similar deal in March when Allianz and Norwich Union's parent Aviva bought stakes worth 10.1% in broker Jelf.

John Harding, group finance director at Jelf Group stressed that the broker would remain independent.

This strategy of buying stakes in independent brokers appears to differ from a more aggressive approach adopted by other insurers.

In January AXA bought Layton Blackham and Stuart Alexander followed by Smart and Cook in April.

While AXA insists it will maintain the independence of the brokers it buys, many fear that at some stage AXA will demand a greater share of the business placed by its own broking operation.

But, Paul Meehan, group chief executive of Smart & Cook, said: “It is important that we continue to trade independently and Axa will run this business at arms length.”

In a similar move in December of last year, Groupama bought motorcycle specialist Carole Nash for an estimated £80m. And earlier this month it purchased a majority shareholding in the Bollington Group for an undisclosed sum.

Royal and Sun Alliance’s (R&SA) has yet to clarify how it will respond to any threat to distribution channels posed by AXA's acquisition strategy.

Mike Lawton, director of regional brokers at R&SA said: "If AXA's acquisition strategy reaches a critical mass, we will be forced to do something. Our strategy will be heavily linked with supporting independent brokers in the market place."

He added: "We will continue to support AXA brokers and they will continue to support us. But as soon as they appear to be moving any business away to AXA, or worse, start to divert intellectual property to AXA, not only us, but the whole industry will act."

One option for R&SA could be to invest, like Aviva and Allianz have done, in independent brokers.

But acquiring brokers has been ruled out. Chief executive Bridget McIntyre told Insurance Times earlier in the year that "buying distribution was not part of our strategy".