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Pen writing up takeover “shopping list”

MGA able to return to the shopping for path after pause since 2015.

Pen Underwriting is gearing up strike its first takeover deal since shopping for Evolution Underwriting in 2015 and has already signed non-disclosure agreements, Insurance Age can reveal.

Jonathan Turner, CEO of the Gallagher-owned managing general agent defined that whereas discussions had not formally began the business was getting ready a “manageable and realistic shopping list”.

“It is part of our future development plans,” Turner confirmed

“If we can find businesses that bolt on, are complementary in terms of what we do – distribution, classes and territories – then we are a fantastic umbrella for businesses to join.”

Purchase
Turner pressured that whereas no deal was imminent he believed that a purchase order can be introduced by Biba 2019.

“I would hope that by this time next year that if we haven’t actually completed one we would be very close,” he commented.

Insurance Age revealed final month that Gallagher’s UK retail broking business was set to return to M&A exercise below CEO Michael Rea after a 3 12 months shopping for hiatus. The agency then purchased Chester-based industrial insurance dealer Risk Services (NW) in May.

Commenting on Pen, Turner flagged: “That [making deals] is how Gallagher as a business has grown up, the way it began within the US and is evolving within the UK.”

Turner defined that the bolt ons might be both to spice up quantity in present traces or “something completely different that we don’t do today”.

“We have been agnostic about what a future acquisition might look like,” he noticed.

Integration
Over the previous 36 months the business has been targeted on integration.

The company was shaped out of Gallagher’s acquisition spree and introduced collectively the likes of Dallas Kirkland, e-Underwriting, Ink, IRS, Keelan Westall, Oamps, Think, Vela, Woodbrook and Zennor below the Pen model in 2014. OIM was added in 2015.

Earlier this month it unveiled its largest grasp binder in its historical past consolidating 15 UK family and SME portfolios in a single 5 12 months association led by Legal & General price £550m over the interval.

Turner pressured that having undertaken all this work the subsequent buy can be small – maybe £10m-20m of gross written premium – reasonably than giant and transformative in scale.

“You don’t want to start with a really big one,” he maintained. “You want to test the plumbing and make sure it works, make sure we know how to do it properly because we haven’t been doing it for the last few years.”

Firepower
According to Turner the business has loads of monetary firepower and with Gallagher’s backing it has “huge enthusiasm and desire to grow inorganically” and isn’t wanting money.

“From a Pen perspective if we are going to do acquisitions it has to be the right fit with the right characteristics and a simple integration rather than something painful, long and slow,” he pressured.

However, he declined to say simply how large the agency might change into because it returns to purchasing mode.

It presently has £500m of GWP.

“We have invested in lots of people and know-how and have an infrastructure that might be double the dimensions with none drawback in any respect.

“I would like to see us become even more meaningful but it is a case of doing that sensibly in an uber-competitive pricing environment.”

Growth
Organic progress may also be a part of the method. It launched the e-trading platform Pen Central final 12 months at Biba 2017 and is now seeing £450,000 of GWP monthly undergo the portal.

“[It’s an] exponential increase month on month,” stated Turner. “It is going great guns.”

The agency can also be in search of natural progress from its 15 workplaces across the UK. “I have always believed that you need to be local to do proper business on the ground and having that capability is important,” acknowledged Turner.

What will not be deliberate are any extra redundancies. It made 11 folks redundant in Chelmsford this March. “We have to make sure that our business is fit for purpose.”

And there aren’t any plans for the business to go on a big broker-agency push. It already has 1,900 energetic UK retail Tobas.

Sale
Likewise it doesn’t seem that the on the market boards are prone to be going up on the “virtual insurer” any time quickly.

“Gallagher is not an entity that sells businesses. It builds and grows and nurtures them,” concluded Turner.

“It has invested money in people, technology and systems. Now would be a nuts time to sell it.”

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