What next for Primary Group in the UK after Policy Expert sale?

With the sale of its majority stake in Policy Expert to the Abu Dhabi Investment Authority last month the one time insurance investment behemoth Primary Group’s UK and Irish portfolio has been significantly scaled back. 

Indeed by my reckoning - and everyone I have spoken too over the ensuing weeks - it stands at C-Quence, the digital MGA it invested in back in 2018.

This is a vastly different picture to 2002, when Insurance Post noted that a combination of acquisitions, joint ventures and organic growth had seen Primary grow to a position where it had 23 profit centres and two parallel holding companies in Bermuda and the UK.

First CEO

These were slimmed down to 12 independent business units and one holding company when Mike King was appointed the first CEO of the Primary Insurance Group.

These included a Lloyd’s broker in Monument, from which the group business originally grew out of; a Dublin-based insurance capacity vehicle, an expatriate healthcare company Goodhealth and an MGA Primary Broker Services to name just four.

[Our] current portfolio has insurance-related investment interests in Europe, Asia, the Gulf and the Americas, but, aside from a small ongoing economic interest in QMG, C-Quence is now its only active UK investment.

Primary Group

Over the subsequent two decades, it is possible to see Primary as one of the best bellwethers of insurance trends, and appetite in the UK and Irish insurance space, with its investments often leading the way on paths that others would follow. 

Some of these paths led to rich rewards; others might be considered rockier roads; but as the saying going ‘nothing ventured, nothing gained’, and this is a mantra by which Primary seemed to live.

Market bellwether

Indeed if there has been a better bellwether for the local insurance sector over the last 20 plus years, then I am happy to be proved wrong.

Long before MGAs were the flavour of the month Primary had flown its flag in the space with the likes of Primary Broker Services and ATD General, which it merged to create Primary Broker Services Holdings in 2006.

Further consolidation followed when it banged Primary General, Rural Group and Longhawk together to create an MGA with £220m of premium and 350 staff. Rebranded UK General this business would eventually be sold to JC Flowers in 2017, bought back in 2020 and then moved onto Montague and RCapital Partners just two years later.

Primary has not only experienced the full gambit of the good and less positive days that MGAs have seen in recent years – not least the dangers of having too much capacity aligned with a small number of insurers; it also played its part in the early noughties wave of broker consolidation through the likes of Vega and Lorica; with the former notching up a raft of deals before seemingly coming unstuck trying to get FM Green over the line.

As has often been the case with Primary, Vega would end up being consolidated and rebranded as part of its larger Lorica business, with its employee benefits business being snapped up by Aon in 2014 and the broking arm by PIB in 2018. 

Entrepreneurial start-ups

With Vega, Primary had backed former Hill House Hammond director Bob Screen, in what is another recurring theme of it supporting people with past track records that were looking to prove their entrepreneurial credentials with start-ups.

This also happened with its decision to back former Rias managing director Andrew Marchington with rival over-50s insurer Castlecover and ex-Kwik-Fit Insurance boss Brendan Devine with motor broker Sure Thing.

It was the case with the aforementioned Policy Expert and one of its most notable investments, Swiftcover too.

When it came to Policy Expert, Primary got behind the former boss of Xbridge (now known as Simply Business) Tony Deacon following the sale of the online commercial insurance broker to Brit; and with Swiftcover it was interested by a team of former Churchill executives including CEO Andrew Blowers, Steve Hardy, David Hiddleston and Craig Staniland after their former employer was merged with Direct Line.  

In doing so, Primary effectively invested in an insurtech in Policy Expert years before the term was coined and a direct business Swiftcover that prided itself on its cost efficient online model which included ‘no clucking call centres’ as its adverts famously boasted.

While Policy Expert was a slow burn that saw Primary only realise its investment in 2023, Swiftcover was sold to Axa for what was considered a remarkable sum for such a young company - £110m - in 2007, less than two years after launch.

Which brings us to the shape of Primary today.

Small company

In its 2007 accounts filed at Companies House the local holding company Primary Group (UK) reported record turnover of £99.42m and a £21.41m profit relating to the provision of group management services, interest receivable and similar income from group loans. 

By 2021 this turnover had shrunk to £5.73m with a reported £1.68m loss highlighting a notable drop in activity in the UK. 

In its last filed accounts for 2022 the results were listed as being “for a small company” with a £1.47m loss on a turnover of £5.34m.

A Primary Group spokesperson said: “[Our] current portfolio has insurance-related investment interests in Europe, Asia, the Gulf and the Americas, but, aside from a small ongoing economic interest in [Policy Expert’s holding company] QMG, C-Quence is now its only active UK investment.” 

With C-Quence, Primary has a business that ticks many of the boxes given its past, of a management team with a track record led by former AIG UK CEO Jacqueline McNamee, looking to do something different in digitalising the commercial space outside of the SME market.

And as shown with Policy Expert, Primary it is happy to wait and see an investment gain market traction and reach a decent size before looking to sell.

C-Quence

While declining to comment on Primary’s involvement, McNamee, now CEO of C-Quence, told Post: “[It] is strategically well positioned to continue its rapid expansion. Innovative proprietary technological capabilities are at the core of our growth strategy. 

"Our intelligent use of data and technology means we deliver products and services in a fraction of the time and cost compared with traditional markets.

“Beyond algorithmic underwriting, we automate all kinds of administrative processes using AI and robotics that improve or eliminate lifecycle bureaucracy whilst driving down operational and underwriting costs. 

"One example, among many, being our recently launched automated submission reader – a cutting-edge tool that enables the generation of quotes with unparalleled ease by simply dragging and dropping submission documents into our feature rich, market leading ‘CQ elements’ platform.”

She added: “However, we know that our growth will not solely driven by technological advances. Therefore, we are equally committed to maintaining the exceptional service excellence for which we are renowned. 

“As part of our commitment to brokers we have, over recent months, strengthened our underwriting, business development and IT teams with seven new recruits.

“Our holistic approach, combining technological innovation with deep insurance expertise, has gained substantial traction in a market that increasingly values efficiency, sustainable practices, and profitable underwriting. 

“By maintaining our focus on these core strengths and by delivering to brokers’, and their clients’, evolving needs we have confidence in our capacity to continue growing rapidly.”

Full stop

What remains to be seen – regardless of what happens with C-Quence -  is whether McNamee’s business will represent a full stop in Primary’s story in the UK as and when it divests; or if it is actively engaging with a new host of insurance entrepreneurs with big ideas to shake up the local market.

Today there are few clues as to whether Primary is planning its UK endgame especially as its website is possibly the most information light in the global insurance space. 

Founder Philip James is also not known for having the biggest media profile letting others speak for their businesses, and only offering the odd quote as and when needed to celebrate an investment or sale. 

So, for now, all we can do is hypothesise about Primary's future; mull that a potential refocus on overseas markets is in and of itself a bellwether of the prospects for UK start-ups - and wonder what might have been had it seen through its mooted plan for a potential initial public offering in 2008.