How do you achieve a successful acquisition in insurance?

CUO on what's next for the group

How do you achieve a successful acquisition in insurance?

Insurance News

By Mia Wallace

“Being busy is only a problem if you don’t enjoy it,” noted Gary Humphreys (pictured), group chief underwriting officer of Markerstudy, as he reflected on the pace of change seen by the business so far in 2022. The group entered the year with a bang, snapping up BGL Insurance (BGLI) from BGL Group and it doesn’t seem like it has any intention of slowing down now.

“I think because of the changes in the market with the pricing regulations and the economic situation, there’s going to be more consolidation and more opportunities for acquisition,” he said. “And you have to be ready to take advantage of those.”

Markerstudy has had significant practice in completing acquisitions and, for Humphreys, the key to that success comes down to two elements – people and systems. In a certain sense, he said, the systems part is easy because you’re essentially just dealing with data. The people piece, however, is the one that is critical to get right because you need to make sure you’re creating the right culture and atmosphere across the wider group.

“You want people to buy into the Markerstudy culture,” he said, “but you don’t want to lose any of the good bits of the acquisition you’ve made. It’s about getting that balance right and keeping people motivated, and, in a lot of cases, it’s about reassuring people. The uncertainty of a takeover is always the same and people do worry about the future.

“So, quickly getting round and reassuring people that the future looks good and the acquisition was made for all the right reasons and is not going to be a negative thing, is [critical]. And it’s exciting when meeting lots of different people in the businesses you acquire, you get lots of opportunities to listen to different ideas. And people’s views from outside of your own business on how they view Markerstudy are good to take on board as well.”

Looking at the hallmarks of a successful acquisition, he highlighted the need for careful consideration prior to any negotiations. Markerstudy doesn’t believe in what the City would call “hostile takeovers” and isn’t looking for businesses with teams that are not aligned with the direction an acquisition might take them in. It’s very difficult to change a negative culture, he said, and so the group spends a lot of time with the key stakeholders of any deal before it is struck to make sure that alignment is there.

“I think we’ve got a good reputation for being fair with people’s businesses when we buy them, whether they want to stay with the business or whether they want to exit,” he said. “We stick to our word, we’re not the business that re-negotiates a deal six months down the line. We agree what we’re happy with upfront and we stick to it. And I think that’s important, both for the businesses that are selling and for the people in those businesses, because they hear what’s going on and they buy into that message of continuity.”

This emphasis on people is why Markerstudy is drawn to acquiring businesses with a great team in place, and Humphreys noted it was one of the main attractions of the group’s recent BGLI deal. It’s always the same when you do a large acquisition, he said, in that the acquired business will have several items in their work stack that they haven’t worked on yet but which represent exciting opportunities. And, in order to make the most of those opportunities, you need to have the right talent in place to take those initiatives forward.

As with so much else in life, success begets success in the M&A space and having a good reputation among advisors in the market self-generates new opportunities. Advisors value a strong relationship where they can rely on smooth execution, as it makes their job easier if they can put forward an offer that they know the acquiring company can deliver on. Markerstudy’s purchase of the underwriting business of Co-op was probably the hardest integration the group has done to date, given the number of legacy systems involved, he said. But delivering that within the timescale the group did sent a clear message to the wider market – that its integration team really knows its stuff.

“[In terms of M&A], we’re not restricted to any particular segment,” Humphreys said. “With the Clegg Gifford acquisition, we’re pushing the Lloyd’s broker angle in the commercial SME market. So, if we see acquisition opportunities that fit with any of our portfolios, then we’re willing to look. And obviously, the bigger the scale, the better now, because each acquisition tends to be bigger than the last one. Not that there are that many bigger than BGLI out there.”

M&A is one strand of Markerstudy’s strategic direction for the rest of 2022 going into 2023, and another current area of focus is on the group’s expansion into the home insurance market. Markerstudy is already very dominant in the motor insurance space, he said, and is now looking to further broaden its offering. Its Co-op acquisition gave it a small window into the home insurance space, which was then expanded through the BGLI deal, and now the group is looking to maximise the opportunity there for growth.

“So, the opportunities now coming from the combined group are just really exciting,” he said. “It’s all about where we can take this to. Every time we do a large deal, as we did with Co-op, you think ‘oh that’s great’ and you take the time to stop and breathe and bed that down. But then you do another one and another one, and you feel that constant excitement of ‘chasing the rainbow’. That’s what we’re really excited about this year. And working through all the new opportunities with our [acquisitions] and our new people is really good fun.”

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