Royal Liver begins drive to buy up independent brokers –(The Irish Times)

04 November 2011

Royal Liver Assurance has embarked on a drive to buy up independent Irish pension brokers in an attempt to widen the reach of Citadel Financial Advice, its wholly-owned life and pensions broker network in Ireland.

The development marks a change of strategy for Citadel, a relatively new organisation which has not previously taken ownership of any brokers.

The company provides administration and other services to its 67 members, and uses its buying power with product issuers to reduce product costs for the brokers in question.

Royal Liver set up this business in 2006 when it closed down the direct sales channel of its main Irish unit, Caledonian Life, which provides life, pensions and investment products.

Citadel took the first step in its acquisition drive shortly before Christmas when it bought Rathmines-based broker Hegarty Financial Management.

Run by businessman Jim Hegarty, the brokerage provides pension, investment, mortgage and deposit services. The consideration was not disclosed.

"We're planning a number of acquisitions in the New Year, and, hopefully, to close certainly at least two deals in the first couple of months of the year.

"We have been talking to a number of brokers out there and some are more advanced in terms of the acquisition process," said Citadel sales director Paul Sutton. He declined to reveal the company's acquisition budget, but suggested it might be seeking to acquire as many as 15 brokers.

"Put it this way, we have a budget to acquire. The profile we're trying to get is brokers in the pensions arena. Whether that stretches to 10 or five or 15 depends on how good we are at negotiating," he said.

"This wasn't part of the original strategy for Citadel, but the management team realised this was the way to go. Royal Liver have backed us all the way on this."

Citadel provides third-party servicing, administration and finance services to network members, as well as finance, information technology, sales, development and training services.

Mr Sutton described the business as akin to a "Musgraves for small brokers".

"Obviously one of the major benefits of being in a network gives better buying power.

"We have a growth strategy over the next three years in terms of recruiting brokers under our wing. Our target is to have over 200 brokers in three years. We now have 67.

"For us to speed that up we've developed an acquisition strategy. The key for us is to acquire brokers who will give us more weight in the market, guys who are well known and experienced. It was important for us that our first acquisition was a person of Jim's calibre."

Royal Liver said in its interim results last September that Citadel made a "maiden first half contribution" to the bottom line this year. "This first half marks the first full six-month contribution and it performed better than expectations.

"The outlook for the second half of the year is positive as the Citadel name becomes more established in the Irish market."