Is confidence returning to the broking sector?

In recent days, Insurance Times has reported the acquisition ambitions of a number of large brokers and consolidators seeking to grow in 2013. The renewed appetite suggests there is some optimism on the horizon.

Yesterday, we revealed Bluefin’s plans. The AXA-owned broker led by Stuart Reid is close to making two acquisitions already this year, and harbours hopes of completing six in total this year.

This sits in tandem with plans revealed recently by other brokers. These include:

• Jelf chief executive Alex Alway said the Bristol-based broking group expected to announce “at least one, if not more acquisitions in 2013”;
• Oval chief executive Peter Blanc told Insurance Times last week that once he completes a bank refinancing, he expects to start making acquisitions in the second half of the year; and
• Gallagher, which has the financial backing of its US parent company, is currently one of a handful of acquisitors considering a swoop for property broker Barbon.

Brokers up and down the country that are looking to sell their businesses, whether small or large, should not be surprised to receive a telephone call or a letter from one of these acquisition-hungry consolidators this year.

Broking model proves strong

Some of this renewed appetite for acquisitions can be put down to the confidence that lenders, such as banks, have in the broking model. Brokers have shown that throughout troubled times, they can still generate cash and manage debt.

Consolidators such as Oval and Jelf are good examples of firms that have managed their debts down to a more sustainable level, and it is no surprise that these brokers are now looking at their growth options and how they can take their businesses up a level.