Eldon’s billion-pound ambition, Brightside and the Remainer ‘witch hunt’
Arron Banks would ‘never say no’ to having a look at buying his former business Brightside to help Eldon on their journey to become a £1bn premium giant.
Passionate EU leaver Banks is on a high after crime officers dropped a ‘politically motivated’ probe and his broking business Eldon posted rocketing profits and revenue.
Speaking exclusively to Insurance Times, Banks said:
- Eldon is ready for acquisitions as hard-pressed smaller MGAs face a tough time
- Machine learning and AI can help propel Eldon from £350m to £1bn in brokerage and premium income
- The crime probe over electoral funding was nothing more than a ‘remain witch hunt’
Banks said his business is like ‘rocket science’ with all the AI and machine, predicting MGA market consolidation as smaller rivals struggle.
“We have seen smaller MGAs struggling to survive because unless you have a sophisticated claims handling, pricing, and the infrastructure, it is very hard to compete in that market,” he said.
“Using AI and machine, you can learn when people are going to ring and when people are going to have changes.
“You can push your resource to where it is needed. There is no doubt about it.
“The strategy of contact of the customer, both on renewal, mid-term adjustments and new business, has become more and more automated.
“We are investing heavily in that kind of process. That is why, sadly, it is getting harder and harder to compete if you don’t do that kind of thing. The way I see the market going is that you’ll end up with much fewer players but bigger ones.”
Eldon acquisitions
On acquisitions, he adds: “We see acquisition targets. If you take income and brokerage, we have hit £350m and our three to five-year plan horizon is to get it one billion.
“From my point of view. If we look at our metrics, we are producing exactly the same as Admiral or Hastings, in terms of being best in class and I see no reason why we wouldn’t grow the business further, particularly in market that is starting to harden.
“We are interested in niche underwriting businesses across the board. Courier, taxi, the whole range of different areas.
“Look at someone like Brightside and we would never say no to having a look at that because clearly it has not gone in the right direction.”
Banks was speaking following impressive results at his firm Eldon, where he is majority shareholder.
Pre-tax profits have risen to £6.541m in 2018 (2017: £2.467m) and broking income to £87.6m (2017: £77.6m).
Eldon offers products across car, home, commercial, life and specialist lines.
It is backed with capacity from several reinsurers and has own carrier arm in Southern Rock.
Banks said Eldon is ‘very similar’ to Admiral or a Hastings, ‘just smaller’.
Around 80% of the business is generated from aggregators, with a significant chunk of income coming from ancillary income.
The AI revolution
Eldon has invested heavily in AI, which is carrying out new ways of working better such as comparing performances of claims handler.
“We have been using quite sophisticated algorithms to pick out the fraud, particularly from price comparison websites. But in general, it is also very helping on the pricing, using these kinds of quite sophisticated models.
“The other aspect is that we did quite well - identifying risks that generating large losses, stopping those coming through as well,” he said.
Banks dismissed any idea that Eldon was winning business on the cheap.
“Our results on the underwriting side have actually outperformed the market as well. If you took account ancillary income.
“If you took into account everything else, our results in the last three years have been almost identical to Admiral.”
Remain ’witch hunt’
Outside of insurance, Banks hit out at the ‘remain witch hunt’ which triggered the National Crime Agency probe into him and his business.
The National Crime Agency revealed it is taking no further action against Banks over claims he broke election law during the EU referendum.
The NCA also dropped investigation into his Brexit campaign Leave.EU, which he founded, its chief executive Elizabeth Bilney and a company called Better for the Country Ltd.
Banks believes there should be ‘searching questions’ over the politicians who kicked it all off.
He is planning to sue the Electoral Commission which originally referred him to the NCA.
Banks said: “It was all political. It was about Brexit. What they have tried to do is discredit the referendum result by making these allegations.
“They wanted to discredit the result by somehow saying it was flawed. It was Russian money or there was something behind it.
“It’s fair to say we are colorful, but we have always denied there was any Russian money or foreign money involved. If you actually read their statement, they were quite explicit to say they had seen no evidence of that.
“It kills off everything else because it shows it was a manufactured allegation with no evidence behind that, and it is true or virtually everything else, and a bit of witch hunt.”
Arron Banks and his firms
Who is Arron Banks?
Arron Banks one of insurance’s best known entrepreneurs. He started out at Lloyd’s in the underwriting department working on catastrophe risks. He then had brief stints at Aviva and Berkshire Hathaway. Banks become frustrated by the ’idiociy’ of the way people worked in insurance. His pugnacious character meant he was destined to work for himself. ”I was always within an inch of getting the sack from everyone I ever worked for because I was a bit pushy, controversial and outspoken.”
What was his first business?
Banks found a little office above a bakery in Thornbury, Gloucestershire, to broker motorcycle insurance and within a few years, the company, called Motorcycle Direct, was big enough to sell to A-Plan. Banks went back to the office above the bakery “to recreate the karma”, as he puts it, with his next idea. Using the cash from the Motorcycle Direct sale, his vision was to become the Direct Line of van insurance by eventually selling through call centres and the internet. The business boomed and got so large he was able lead a reverse takeover of listed Brightside. He eventually sold out of Brightside and focused his efforts on Eldon.
Tell me more about Eldon?
Eldon is backed by a number of several big reinsurers, with its own capacity carrier in Southern Rock. It brokes business that comes from a number of its own brands - vehicle specialists Go Skippy, SME broker Business Choice Direct and life and car intermediary Vavista - into its fully-fledged MGA. The AI-driven MGA does the pricing, underwriting and claims.
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