Norwich Union to take stake in broker Giles

Norwich Union (NU) is poised to take a minority stake in broker Giles Insurance in a move that will further fuel the debate over broker ownership.

Sources close to the deal said the insurance giant was in advanced negotiations to buy a 7% stake in the privately owned broker.

It is thought the investment will be completed within the next two weeks.

Janice Deakin, NU director of trading, is expected to take a non-executive seat on the Giles board.

The deal is NU’s second investment in a major broker this year. In March it purchased a 5% stake in AIM-list broker Jelf. The move will add to the continuing debate over the changing shape of the broker market and the battle for distribution.

This year has seen AXA and Groupama begin acquiring commercial brokers, while NU and Allianz have bought small stakes in brokers. NU and Allianz say their investments are a means to support independent brokers.

But the strategy has prompted speculation that they are looking to protect their distribution channels in the face of rival insurers’ acquisitions.

The fact that Giles is not a listed company will add to this speculation as its shares are not publicly available.

Last week AXA and Groupama approached a combined £1bn GWP from the owned brokers with the acquisitions of Davis Group and Lark respectively.

One senior broker said: “Insurers may be looking to protect their position by taking a minority stake. At best, it is to protect an account, at worst, it is to grow it.”

But a senior NU source stressed its investment was not aimed at influencing where business was placed.

“It is a symbol of our faith in the management. There is no clause relating to the placement of business.

“NU is focused on supporting independent brokers. We believe that business clients are best served by independent brokers.”

The source added that NU was in discussions with a number of other brokers over a range of funding strategies.

Giles is a top 25 UK broker with a fee and commission income over £35m. Jelf is a top 35 broker with revenues of £25m.

NU and Giles declined to comment.