Fiona Murphy catches up with Chase Templeton's Warren Dickson to discuss the adviser-consolidator's latest acquisition activity and what's next on the horizon.
Chase Templeton has been busy, to say the least, over the past few years. In 2014 the private medical insurance adviser-consolidator firm completed 26 deals - the purchase of private medical insurance (PMI) adviser firms - to expand its business.
So far in 2015 the firm has completed five deals including the purchase of two firms previously owned by former Association of Medical Insurers and Intermediaries (AMII) executive committee members (Debbie Kleiner-Gaines' Best Health and Graeme Godfrey's Best Go Private.)
In its last announcement to the press, Chase Templeton revealed its biggest purchase to date, Atlas Consulting Group in a deal worth £13.8m annual premium income.
We took a moralistic view of the PMI market. We believed we could get growth organically [instead of using marketing]. We wanted a more aggressive approach, and went on to a build and buy strategy
The deal is also the 49th completed since it secured the backing of Palatine Private Equity in 2013, meaning that Chase Templeton now generates over £125m API.
I asked Warren Dickson, chief executive of Chase Templeton, to tell me about the acquisitions in a bit more detail, and to see where the company will go next, amid an ever-more challenging private medical insurance (PMI) market.
Aggressive growth strategy
So why has Chase Templeton applied such an aggressive growth strategy, particularly in the past two years?
Dickson said: "If we wind back the clock, Chase Templeton has been going for over ten years. The founder Kevin Amphlett set up the business.
"In the past three years, Chase Templeton secured backing of [private equity specialist] Palatine Private Equity and took me on as chief executive, and we took a strategic review. We took a moralistic view of the PMI market.
"We believed we could get growth organically [instead of using marketing]. We wanted a more aggressive approach, and went on to a build and buy strategy.
"The PMI market is typically grown through either outbound telephone department to create leads and online propositions such as through online lead providers, where you can buy leads off the internet. We found a lot of new business in PMI came through those models. We said we didn't think the growth would be there, rather than using marketing, we knew we could grow the products wholesale."
Dickson, who was head-hunted by Chase Templeton in February 2013, began his career at a general broker in Manchester, before joining motorcycle insurance firm Carole Nash.
He spent 15 years there, starting on the phones and working his way up to become sales and marketing director. He left in 2007 to take the same position at Preston-based disability insurance broker Fish Insurance, where he was subsequently appointed managing director.
PMI market
The PMI market is no stranger to consolidation and loss of well-known brands: in the past five years, we have seen changes concerning Standard Life Healthcare and Groupama Healthcare, while CIGNA left the SME market and Health-on-line was absorbed by AXA PPP.
This year, the big announcement was AXA PPP's acquisition of Simplyhealth and The Permanent Health Company. Broker firms have had similar patterns of consolidation, which again have been gearing up this year.
With all of the acquisitions, is Chase Templeton driving industry behaviour, and is consolidation really such a good thing in such a shrinking marketplace?
Dickson said: "If you look at the whole marketplace, regardless of Chase Templeton, it is consolidating.
"You can see that with [mergers including] Willis and PMI Health Group, Lorica, AXA PPP and Simplyhealth. People are waking up to the fact that the market isn't growing. The recent LaingBuisson results showed a 14,000 drop [in the numbers of individual and company paid policies].
"Looking at the recent LaingBuisson report, the market is contracting. It has gone from about 12.5% of the population, with PMI five to six years ago down to about 10%. In recent years 30,000 less policies have been sold.
In context, Chase Templeton has an API of about £125m in a market of about £3.8bn, so our market share is tiny. Even if the market contracts, we still have plenty of room to grow. This growth will come via acquisition."
