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.
Dickson said this question should be posed to insurers: "There are only four major insurers. This makes any meaningful growth challenging when you overlay a reducing market. That doesn't mean to say growth is impossible: it just makes it more difficult."
Despite the shrinking market, Dickson is optimistic about growth: "We have plenty of headroom going into the marketplace, in terms of brokers we have plenty of scope to grow."
So, with so many challenges in the PMI market, why is it so attractive?
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
Dickson said: "With PMI, we like recurring income, and the lapse rate is low. Compared with GI, our lapse rate is 10%. With GI, the lapse rate on policies tends to be 40%. We like the fact that it is good recurring income and you tend to attract loyalty, if you service the client well, then you should grow your business."
Other activities
Outside of Chase Templeton's recognition in the PMI industry, it has also become associated with supporting local teams, with sponsorship of Blackburn Rovers' medical team and Lancashire County Cricket Club's medical team.
As a company that didn't dabble in traditional marketing, preferring to buy businesses instead, why is this local visibility so important for Chase Templeton?
Dickson said: "We're a north-west-based business, and we have an office in Somerset. We wanted to put something back into the community, and most of our staff from Darwin, Lancashire are Blackburn based.
"We thought the sponsorships would have nice synergy, raise the profile of our business and help with recruitment in the local areas. Take our sponsorship of Lancashire cricket team's medical staff, we secured business from networking and it raised our profile.
"We're not going to do a Vitality [in terms of big sponsorships. It's very much around the North West region and looking to grow our brand."
Fewer but bigger deals
In the past, Chase Templeton's business came from owner's wishes to dispose of their businesses or books due to retirement, concern about increasing regulatory obligations or because PMI is a non-core activity. However, earlier in the year,
Dickson reported "a surge of activity" from brokers and intermediaries discussing selling their business through concern about what the General Election might bring.
He had previously discussed a commitment to "fewer but bigger deals" as their business matures. I wonder how these dynamics have been going for them - are they still wanting to acquire more and are they still sticking to the "fewer but bigger" mantra?
Now he explains they are currently working on deals, subject to approvals and cannot give away any names.
He said: "We decided to sit down and do a buy and build strategy. We went for low hanging fruit, and smaller-type brokers: husband and wife-type owners in the beginning.
"Then we decided to do fewer but bigger deals. It's fair to say we have another two or three deals we are hoping to get across the line imminently by the end of this calendar year. We should be hoping to have in excess of £140m of premium income."
With Chase Templeton acquiring almost 50 businesses in fast succession, is there anyone it turns away?
Dickson said: "We're one of the fastest-growing firms in our sector, we are keen to look at targets. We sometimes have to turn two or three firms away. You would be surprised how many PMI adviser firms are looking to sell out there.
"The one thing that puts us off from buying a business is vendors' expectation on price or when you get under the bonnet and look at the book of business, just a small part of the business might be PMI, It might other aspects of financial planning as well, which we don't want to take on.
Dickson concludes: "We are enjoying what we're doing, experiencing good growth and opportunities, good organic sells, and we are cross-selling [through group risk, dental and cash plans], and adding new policies."
