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Risk book demand surges amid convergence

Insurance books are attracting higher multiples than financial planning client books or loan books as mortgage brokers and financial advisers converge via acquisition, according to an M&A specialist.

Steve Prendeville of Forte Asset Solutions told ifa has seen an increase in industry convergence with mortgage brokers entering the advice space, as well as significant demand for insurance books.

“There is no doubt there is the convergence, but I am seeing it more with mortgage brokers coming into financial advice, and specifically risk with the insurances being sold,” Mr Prendeville said. “Risk will often be a book sale.”

“It attracts a higher multiple than financial planning, which is around about three times recurring revenue, while risk is about 3.5 times recurring.”

Insurance books attract a higher premium because they are not held hostage to economic market movements, Mr Prendeville said, adding that as a result of this they are a scarce asset.

“Very few come to market,” he said. “People jump on them when they do and there is significant demand right now.”