Consolidator set to unveil strong results for 2007.
Towergate executive chairman Peter Cullum has said the consolidator is considering expanding into the US as part of its drive for growth.
Cullum also revealed that Towergate was set to unveil strong growth in revenue and profits for 2007, despite tough market conditions.
In an exclusive interview with Insurance Times, Cullum said: “For the first time we are looking outside the UK quite seriously. We are looking at the US, two or three acquisitions on the managed general agent (MGA) side. It would be a big number for us.”
A move into the US could be attractive for Towergate as the country has a large and well-developed MGA sector. Approximately 50% of Towergate’s business comes from its MGA or virtual insurer division.
Towergate chief executive Andy Homer said the company was considering other international acquisitions beyond America. But he said any acquisitions would be some way off, adding: “The US is an opportunity for us as is the rest of Europe. It is more research and development for the next 12 months. None of us has been out there yet.”
Homer said that at present Towergate was focusing on its recent acquisitions such as Broker Network, which will form the basis of a networks division.
Cullum also said its 2007 accounts, which are due to be published next month, would show like-for-like growth in profit of over 20% and growth in turnover of over 10%.
“That [result] was in a very, very hostile market place. I don’t think you will find many brokers in the UK showing significant growth in their 2006/2007 numbers given the soft market,” he said, adding: “We are an organisation that earns significantly from profit shares and with 2007 not being a great year, we come under the cosh as much as everyone else.”
Cullum said Towergate had achieved significant increases in the profitability of the businesses it had bought. He pointed to the acquisition of mortgage-related general insurance broker Paymentshield, which Towergate acquired in 2006, as an example.
“We paid £180m for it. The adjusted EBITDA [a measure of earnings] was £13m – so that’s a pretty sexy multiple. In the space of over a year we have more than doubled its profitability in a market place that is pretty dull,” he said.
