Towergate's promotion to the insurance big league is a ringing endorsement for the UK economy by its US backers, the firm's bosses said today.
The broker shook-up the mid-market insurance sector this morning. Autonet, Chase Templeton, Ryan Direct, Price Forbes and Towergate will merge into a newly-formed group called KIRS.
The strategic realignment was driven by the group's owners, US private equity firms HPS (formerly known as Highbridge) and Madison Dearborn.
David Ross, the current Towergate boss, will head up the new group. He told City A.M. the deal was a "massive" seal of approval for the UK financial sector by its US owners, adding:
It is a fantastic endorsement of the economy and something the country should be proud of.
Strong as ever
The former head of the Financial Services Authority, the predecessor to the Financial Conduct Authority, John Tiner, has been selected as the group's new chairman.
He said: “What is interesting about Brexit is that the decision was taken on 23 June has not at all disturbed that appetite for the UK market. It is strong as ever.
“Not only have Madison Dearborn put their money in since then but we’ve had rights issues with shareholders following with their money. It is a very strong commitment to the UK economy more broadly."
The UK mid-market broking sector has seen consolidation in recent years. In particular, Marsh & McLennan swallowed Jelf in 2015 and Bluefin 2016.
“Those two deals made Towergate the last unicorn in the market, multiple times bigger than the next competitor in the market," said Ross.
“What we now have is: whether you are sitting with a laptop sat on your knee looking for car or home insurance, or on top of an oil rig worrying about your insurance as the oil spilling into the sea; we’ve basically filled out our offering completely.
The new entity that has been launched today is effectively in a peer group with JLT or Willis Towers Watson, rather than being a regional middle-market broker. It is a very significant day in the industry.
While the individual firms will retain their own branding, the wider group is set for change.
Ross said: “We are very clearly rebranding the group of Towergate and moving away to create a new company."
The pair added such a rebranding will be completed in the next two months.
The new group is expected to generate around £2.8bn of gross written premiums and employ more than 5,000 people.
And Tiner revealed the group's shareholders are on the hunt for other opportunities.
He said: “The shareholders definitely have appetite to grow this business further. But to do it on a basis of a highly disciplined financial understanding of the businesses that are acquired.”
Ross added: “It is completely conceivable that this new company could be several times bigger in years from now as a global player. It’s certainly within our reach."