Finally, you’ve got that elusive executive exactly where you want them… the spotlight is shining, their sweat is dripping… it’s time to get the answers you’ve been waiting for.
For Broker Network members, thankfully, it wasn’t necessary to lock anyone in a room or tie them to a chair James Bond-style to get answers – on the contrary, the Network’s executives actually chose to put themselves under the bright lights as part of a panel in which they answered member questions at last week’s conference.
“What’s going to happen when the capital dries up for acquisitions?” was the stark opening question from one anonymous broker – all members were encouraged to write their questions on cards so they didn’t feel the need to hold anything back. It was a question that chief commercial officer Des O’Connor was ready for.
“Our investors manage funds of about $40 billion each – they are real powerhouses,” he explained. “They are very happy with the level of investment they’ve put into Broker Network so far since the ownership changed hands and they’ve probably lent the facility around about £100 million.
“In terms of that running out or not being topped up, I think it’s worth pointing to their attitude to invest in the insurance industry – the best example is in the US, the 10th largest broker in the world is a broker called NFP, which started in a similar manner to Broker Network. Today it is a $300 million business. There was cash provided by Madison Dearborn and latterly Highbridge and they eventually got to the point where they were self-funding. So, what I expect to happen is that we will keep going, continue to make acquisitions and it will get to the point where we won’t need funding.”
So, members could feel reassured that the Network isn’t going to go bust – but is it still committed to them, asked another broker?
“Yes,” was the resounding response from chief network officer Richard Pitt.
“Andy [Fairchild, chief executive] said we’d start with about 550 members and finish with about 550 members and he’s absolutely right,” Pitt elaborated. “We exited about 20 members this year because they didn’t reach the bar for our level of acceptance. Knowing that we have that standard gives us that quality stamp for insurers and serves as an endorsement for what the network does.”
Questions came thick and fast covering various topics such as the MGA market, FCA regulation and perhaps the big one in the mind of many members – will the Network ever partner with Aviva?
“Aviva are an important market for Broker Network Partners and for a lot of our members,” explained Fairchild. “But here’s the facts: Aviva’s network strategy is pretty clear to me - they want to do it themselves. I understand it and I respect it.
“We have open dialogues with Aviva – we’re the biggest network in the UK and they’re the biggest insurer in the UK. They are not a partner of ours, they’re not a strategic insurer partner of ours, they don’t contribute to the income in the Network, but they do contribute to the income for Broker Network Partners of course.”
Speaking of Broker Network Partners, O’Connor was quizzed on where the model would go next.
“The partner model was born out of the need to service members,” he said. “We have gaps in the South West, the Midlands, the North East, in Wales, in London – so we’ll get busy in 2019 completing that footprint and end up with, I think, 12 or 13 partners.”
But as the Network expands so rapidly that could, in itself, create issues – so what are the biggest challenges that the CEO believes the Network is facing?
“To keep this culture,” said Fairchild. “Expansive strategy creates inevitable tensions and we need to lead through them. Trust me - every single day, we concern ourselves with the people and the prevailing culture within which they operate.”
Concluding that brokers will be “alive, kicking and thriving” long into the future, Fairchild gave off an air of confidence and positivity. But perhaps it wasn’t so much the answers given as the fact that there was a forum to put those questions forward and be listened to that reassured members most of all.
