Karen Beales discusses what the future holds for UK General Insurance
Karen Beales, Chief executive officer of UK General, took part in an interview with Insurance Post to discuss what the future holds for the MGA. The interview can be read below.
Karen Beales was recently appointed CEO of UK General from her existing role as managing director, following JC Flowers’s acquisition of the company. Post discussed with Beales what the future holds for the managing general agent.
UK General was in talks with a number of potential acquirers before the agreement was struck with the private equity firm in March. Beales said that following the agreement, which had been in development for some time, the group is now in a position to enact its ambitious growth and expansion plans.
“We see the acquisition as a really exciting opportunity,” she said. “Hopefully we’ll be able to seek investment from Flowers if there are new opportunities or we want to do something different with the business.
“JC Flowers will agree our plans going forward but not dictate the plans to us. Our aim is to be delivering £20m EBITDA by 2020. There’s no reason we can’t do that, we have a very clear plan and strategy through more scheme business and through looking at our digital strategy. With more investment, we’ll be able to press that forward.
“We still believe that the majority of our 2020 goals will come from the schemes world. We see that continuing to grow, and at the moment it’s about 97% of our income. However, in time, it would be good to be around 80/20, with 80% coming from schemes and 20% coming from white label, but I don’t think that will be the case by 2020.”
Beales said that the new capital provided by the private equity firm has put the MGA in a position to look at potential acquisition targets.
“Maybe portfolios of business, maybe runoff of renewals, there’s a lot of activity in the MGA world,” she said. “Brokers have consolidated a lot, there’s absolutely no reason why MGAs won’t do the same, and we’re one of the larger ones.
“We don’t intend to launch off into doing big books of household business for example that competes with the composite insurers. That’s not our intention and I can’t imagine it ever will be. We will remain niche but, in doing so, there may be small- to medium-sized MGAs out there that we could look to acquire.
“When it comes to acquiring commercial MGAs, I’d never say never, but if we did, it would be more in the scheme world rather than open market. That’s what we’re good at, and at the end of the day we try to stick to our knitting.
“The key for us is about writing business profitably rather than just bringing volume into the business. If you don’t know what you’re doing, that can be very dangerous. So if we weren’t able to bring in the right people, we wouldn’t do it.
“In terms of a ‘war chest’, we’ve not yet had that conversation with Flowers because it’s very early days. If there was a suitable opportunity, they would certainly be interested.”
It has not all been plain sailing for UK General, however. Earlier this month, strategy and change director Nick Rawlings and marketing manager Ria Cusimano left the business.
They followed chief risk officer Steve Blott and technical director Simon Tate, who left the business in May and June respectively.
Despite this, Beales said that staff morale is high following the acquisition: “Staff morale is actually really good,” she said. “We keep them informed; we can’t tell everything to everybody all of the time because no business can do that, but as soon as we can tell staff, we tell them.
“We’re very open with people. People know we are recruiting into new roles for example, so that’s not been a secret within the organisation. From the staff’s perspective, it’s now back to business as usual following the acquisition, and they’re excited by the opportunity for the investment.”
Before the acquisition, Post revealed last year that UK General had been ordered by the Financial Conduct Authority to investigate alleged mis-selling by its appointed representatives.
Beales said that UK General had been conducting its own review into its ARs before the watchdog’s thematic review took place.
“ARs are not part of our strategy,” she said. “By 2020 we’ll probably still have the ones we have, but it’s not part of the strategy to take any more on. We used to have around a dozen, and over the last two years we’ve reduced that to around five.
“They’ve never really been part of the strategy; some are legacy, and it’s not our intention to appoint new ones. There’s no reason to assume we won’t retain the ones we’re left with, they will have to do the same compulsory courses and training [as our staff].”
Going forward, Beales said that the MGA will continue its focus on niche lines, with the aim of writing business for profit rather than volume.
“From our point of view, we regard ourselves as being an insurer,” she said. “We think, we feel and we act like an insurer. From our point of view, it’s about demonstrating that we have the expertise to write for profit, not just for volume.
“That’s our motto, that’s how we think and feel. Interesting now that we have insurers coming to us, they clearly recognise the skills that we’ve built now.
“As an MGA, you are reliant on having capacity. It’s easy to write volume. But you have to recognise that the results sit with you, they don’t sit with the capacity provider, and you won’t find capacity again.
“I’m an underwriter by background, and for me the most important thing is maintaining long-term relationships. There’s nothing worse than chopping and changing insurers. It’s a huge task to do that.
“For us, it’s important to maintain that long-term relationship. Clearly the insurer wants you to deliver profit, but they don’t drive that, that’s driven by us.”
Orignially published on 26th July 2017. Click here to view the full interview on POST online.