Broker leader explains results, investments and future targets.
Lycetts is targeting a new office in Bristol as part of its ongoing expansion plans.
The Newcastle-headquartered group, which is already present in 12 locations, is seeking four to six staff across high net worth and commercial business, to help it deepen its client book in the West Country.
In addition the firm would like to add four members of staff in its London office.
“We are not close to it in the sense of having the people lined up but we are looking,” Charles Foster, CEO of Lycetts, told Insurance Age.
Growth
The business grew turnover by 3% organically to £20.57m in 2017. It is targeting a further 5% in 2018.
“We are there or thereabouts, we are more or less on target,” said Foster on progress this year.
However, he pointed out that the firm’s owner, Ecclesiastical, which also owns SEIB, was keen to invest in its brokers.
“They want to treble the revenue from their broker divisions. They are ambitious for us and 5% clearly is not enough to deliver that target.”
Acquisitions
In particular he noted that the insurer was well-funded and that acquisitions were an option as that level of growth would not be delivered organically.
“The pool of similar like-minded businesses to ourselves is slowly getting smaller,” Foster observed.
“They keep being bought. We are looking to buy, we have resource from our shareholder to pay for it but are going to be picky about what those opportunities are.”
Over the past two years the company has grown revenue while profits have fallen.
Operating profit has reduced from £1.98m in 2015 to £1.92m in 2016 and £977,000 in 2017.
Again Foster stressed that he believed Ecclesiastical was happy with the performance and with the profit levels staying “where they are at the moment” due to ongoing investments.
Investments
In addition to adding new members of staff – it took on an extra 12 people last year – he listed IT and marketing as being areas of focus.
The extra headcount was due to “new sales staff and backup staff to enable the sales team to be out and about rather than being bogged down with administrative work”.
And over the past two years the broker has been moving from several IT platforms to Open GI. The process is due to be completed at the start of next year.
“It is now on target, we are transacting business on it and anticipate being fully on it by January 2019.
“It [the cost] will have a significant impact on the 2018 numbers. Over a three year period it is a multi-million pound investment for us.”
According to Foster the IT costs will tail off very quickly in 2019 and the profit will return.
Retention
Looking back at the 2017 figures Foster reported that the organic growth had been driven by “considerable new business growth” in the equine and bloodstock division, forward movement across farms, commercial, agricultural and high net worth business all underpinned by a retention rate of 94%.
The financial services subsidiary also posted a 36% increase in revenue to help the numbers. Foster detailed that new rules related to pension transfers had been part of this and that he was “bullish” about the division which now has more assets under management than ever before.
As for marketing the increased spend had delivered market awareness in the farming sector with a 16% increase in brand recognition between 2016 and 2017 showing a “considerable step forward”.
CEO
Foster took up the reins as CEO in December 2017.
Along with improving the IT, recruitment and communication he has worked on strategic projects – “some very simple, some more time consuming” – such as increasing the risk management services.
“Some of the non-insurance services that other people offer are areas we have to be looking at,” he declared. “If our competitors are offering them then we need to.”
He has been with the broker since 1991. So has he enjoyed the step up?
Staff
He flagged that there was a strong presence within the company in the 25-35 year old bracket.
“Our younger team and future management team have powerful candidates among the women as well as the men which is encouraging.
“There is a generational shift going on.”
And concluded by praising the staff overall.
“Lycetts’ employees are in the privileged position of working with an outstandingly nice group of people. It is a pleasure be with them,” he summed up.
“Whenever we have a conference I come home thinking I would quite happily spend my day with them anyway.”
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