Pledge to invest follows £12m deal

Jelf said the acquisition is “significant” for the firm, which provides advice on insurance, employee benefits, healthcare and financial planning for businesses, and will see its gross written insurance premiums increase by £53m to £235m.

Insurance broker TIP, as The Insurance Partnership is known, employs around 150 people across its headquarters in Hull and offices in Leeds, York and Wolverhampton, all of which will transfer to Jelf with the takeover.

“We want to invest. We want to grow in all those locations”, said Alex Alway, CEO of Jelf, which employs 930 people and recently reported half-year revenues of £35.9m, up 1.9 per cent year-on-year, with Ebitdae rising by 14.3 per cent to £5.1m.

Analysts from finnCap said that Jelf is consolidating its number six position amongst UK SME insurance brokers with the acquisition of TIP.

“The idea is that with the fact that we are a slightly larger group with money to invest, there will be an opportunity to grow those businesses organically and also we believe, because we offer services other than insurance, we can offer The Insurance Partnership’s clients other services such as healthcare”, said Mr Alway.

He said Jelf can also help TIP upgrade its systems and will provide opportunities for staff training, while office facilities may be improved if required.

Jelf said it would buy TIP, subject to conditions, for an initial consideration of £12m

A further £3.5m payment will be dependant on TIP’s future performance.

The initial £12m will be met by £8.9m of cash and £3.1m in new Jelf shares to be issued to key senior management and sales people of TIP on completion of the deal.

Mr Alway added: “What they bring to us is a number of key skills that we don’t have.

“They are very strong in the large corporate market and also they have some expertise in what we call schemes and affinities, that’s where they are focused on particular niche areas. We have a small number of clients in Yorkshire and this will complement what we have all over the country.”

In the year ended June 30, 2012, TIP achieved adjusted revenue of £8.8m, up from £6.5m in 2010. Adjusted Ebitda in 2012 was £1.3m, up from £500,000 in 2010. John Harding, group finance and operations director at Jelf, said TIP has shown “good solid, steady growth” over its 20-year history.

Rob Worrell, the managing director of TIP, will join the board of Jelf Insurance Brokers as a director. He said: “TIP was never a business for sale but TIP and Jelf are such a perfect fit. It was that simple-shared vision, values and culture with a complete passion for client service and committed delivery. Our combined sum of the parts will create a market leading organisation.”

Mr Alway said that he expects the wave of consolidation which has swept the insurance sector in recent times to continue, adding that Jelf will be participating “just at a slightly slower pace than some of the others”.

Speaking about the consolidation, he said: “I think the increased use if technology has been a factor, the ageing population, though not in the case of The Insurance Partnership, of brokers per se... so succession is an issue.

“But probably the biggest factor is the regulation, with the advent of the FSA (Financial Services Authority) and latterly the FCA (Financial Conduct Authority), we’re seeing a significant number of brokers having to spend a lot more time on regulation as opposed to looking after their clients.”