Central Insurance, one of the biggest brokers in Scotland, has been snapped up by American giant Marsh in a deal thought to be worth more than £20 million.
Iain Henry, managing director at Central, will become head of Marsh’s expanded Scottish operations while his fellow owner-managers will remain with the business and take up roles at the international firm.
Marsh has been pursuing Aberdeen-based Central for at least two years but the exact size of the deal was not disclosed. Sources within the insurance industry suggested that the figure would be “more than £20m”.
Such a haul would trigger a bumper payday for Henry and his seven fellow directors, all of whom held shares in the business, which turned over £11.4m in the year to 31 September, 2012, and made a pre-tax profit of £921,495.
Joe Grogan, chief executive of Marsh’s corporate business in the UK and Ireland, revealed that his firm had been stalking Central for many months.
“We’ve been talking to Iain for more than two years and we accelerated those conversations over the past six months,” Grogan explained. “The negotiations were concluded relatively quickly, in under 90 days.”
Grogan said Marsh had been attracted to Central because of its involvement in the oil and gas sector and its work with high net-worth individuals.
“This is a growth acquisition rather than being about taking costs out of the business,” Grogan added.
Mark Weil, chief executive at Marsh UK & Ireland, highlighted his company’s desire to support firms moving into the “emerging shale gas industry”.
Olly Laughton-Scott, managing partner at corporate finance advisory firm Imas, said: “There are very few opportunities for brokers to grow their operations in Scotland so Central represents a strategic asset for Marsh.
“I think this will have been mainly about the oil and gas sector – if you want to grow in Scotland then Central was an obvious asset to go for.”
Central was founded in 1973 and has 130 staff at its offices in Aberdeen, Edinburgh and Glasgow, as well as Kendal, Cumbria, where it bought high-performance car specialist Peart Insurance Brokers in 2008 for £1.5m. In 2011 Central acquired Aberdeen-based rival Collins, Halden & Burnett (CHB) for £2.6m and Edinburgh-based Castle Cairn for £2.3m.
Grogan said Marsh had a similarly-sized operation in Scotland prior to the Central deal, with offices in Aberdeen, Edinburgh and Glasgow. The company’s Edinburgh office includes its UK-wide claims and protection operations.
Marsh has 27,000 staff in more than 100 countries and is owned by New York-listed Marsh & McLennan Companies, which in total has 54,000 workers and turns over about $12 billion (£7bn).
Henry told The Scotsman that the deal would give his clients access to a wider range of insurance products and would give his staff much broader career opportunities within Marsh.
In June, Central signed a partnership deal with Abstract, a staff development firm run by former Scottish rugby captain Andy Nicol, who famously led the national side to victory over England in the final game of the Six Nations in 2000 before joining Royal Bank of Scotland after his playing career ended.