“We don’t like to target areas where insurers essentially are swapping each other’s business,” said Andy Holmes (pictured above). “We much prefer to attract target areas where there are brand new buyers of insurance.”
Holmes is London-based CEO of specialist insurer CFC Underwriting (CFC). He was recently in Australia to sign an agreement to acquire Solution Underwriting (Solution), a firm focused on financial lines offerings.
According to a CFC media release, the acquisition expands the firm’s local footprint to five offices and nearly 100 underwriting, claims and cyber incident response staff. Holmes said Solution has about 50 staff across four offices in Melbourne, Sydney, Brisbane and Perth.
He said a main purpose of his trip Down Under was to get to know his new partners better.
“And really just deepen and broaden the relationship because the wider Solution team, across their four offices, are going to be crucial to the success of CFC in Australia,” he said. “What was amazing was the strength and depth that they have.”
Insurance Business asked what that strength consists of and what does it allow CFC to do in Australia that the firm couldn’t do before?
Holmes said this Australian firm is strong “in some of the areas where we’re strong, like professional indemnity.”
The CEO also said the acquisition allows his firm to overcome its “greatest challenge” in Australia up until now: the tyranny of distance.
“The greatest challenge for us with Australia was actually just the sheer distance and the diametrically opposite time zones,” he said. “I think, with the Solution acquisition, we will overcome that most significant of hurdles and we really do feel that we’ve got bright prospects now, particularly in cyber in the Australian market.”
The acquisition, he said, will also enable his firm to add cyber – CFC’s largest product – to Solution’s broker offerings.
He said there is “natural growth” in the cyber market as a result of growing numbers of businesses being concerned about attacks.
“So our Australian book over the last 12 months has grown 25% which is really strong growth in that market,” said Holmes. “If we can do that from 10,000 miles away, what can we really do when we’re actually in the cities where our brokers are able to talk, in time zone, and build those closer personal relationships?”
CFC already has a Cyber Incident Response business on the Gold Coast with about 30 people.
Holmes said his firm is looking at other insurance opportunities in Australia too.
“There are also other product lines like technology, transaction liability, management liability - areas that we have strength in - that we think we can add to the Solution roster of products and really increase the breadth of their offerings to their brokers,” he said.
“We’re expecting a global pickup in M&A over the course of the next 12 months,” he said. “We’re already seeing the green shoots of that in our numbers right now.”
Technology is another sector where CFC’s CEO sees bright prospects.
“The technology revolution isn’t slowing, it’s continually evolving in areas like AI,” he said. “We have a very large technology portfolio because, while CFC was founded on cyber, it’s second area of speciality was technology and we do feel there’s a great opportunity to advance that area in Australia as well.”
Holmes said much of this new business could come from insuring software development companies and IT consultants.
“Also, areas like gaming, which is a form of technology development and indeed into the areas of crypto [cryptocurrency], so some of the technology that has massed around that industry,” he said. “We’re insuring the risks that are borne out of the modern digital economy so really targeting those emerging sectors.”
Holmes said he feels “a real kinship” between the type of people at CFC and those at Solution.
“They’re passionate, they have a fantastic work ethic, they’re very likeable and, frankly, the rest you can teach,” he said. “I think they’ve got a brilliant foundation there.”
He said London-headquartered CFC has always found Australia to be a “a great economy to work in.”
“We do feel that we’ve reached a stage now, where to take our Australian portfolio to the next level, we need to be on the ground as underwriters and in time zone,” he said.
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