THB Group hires Deloitte to search for suitable acquisitions

Lloyd’s broker THB Group has hired consulting firm Deloitte to help scour the market and target acquisitions.

The reinsurance and insurance broker, which last week posted a 91% increase in profit for the six months ended 30 April 2010, is hoping to close a deal soon.

THB made a net profit of £806,000 in the first half of its accounting year, compared with £421,000 in the same period during 2008/09.

The firm’s group finance director, Rob Wilkinson, said: “The fact that we have got Deloitte assisting us means we have spent a bit of money on the process and we would like to get something for it. We are looking for results and are very keen to do something.”

Wilkinson was reluctant to give a precise timeframe for when THB would like to make an acquisition, given the time it can take to approach target companies and discuss deals. But he added: “I would be disappointed if we didn’t do something by the end of the next financial year.”

Wilkinson said the firm had seen a number of businesses up for sale, but it had passed on them so far.

“Some of those were situations that we felt either weren’t a good cultural fit or were slightly more trouble than we wanted to take on,” he said.

THB is hoping to expand both by hiring teams of brokers and buying small-to-mid-sized businesses outright that may not yet have considered putting themselves on the market.

He added that the firm is looking to expand in areas where it is currently strong, such as delegated authority property business, as well as build up its European and UK wholesale units, rather than grow into new areas.

While THB Group’s first-half results were an improvement over the prior-year period, THB UK made an operating loss of £165,000 for the six months ended 30 April 2010, compared with an operating profit of £377,000 in the same period during 2008/09.

This was partly because the unit was no longer benefiting from profits generated by the equine business of its Unicorn managing general agency. This business and its associated underwriting and claims team were transferred to insurer XL in November last year.

Wilkinson said the sale of the unit was part of the business plan for Unicorn, which THB sees as “an incubator for entrepreneurial underwriters”. The firm will now rebuild Unicorn.

THB UK was also hit by a drop in turnover at Cardinum Risk Management as a result of government departments it serves deferring their spending decisions ahead of the general election.

Offsetting this, THB’s international division returned to profitability, posting an operating profit of £492,000 in 2009/10, versus a loss of £209,000 in the same period the previous year.