The insurance industry is in the middle of consolidation, and the next acquisition could well be that of broker Heath Lambert by rival Jardine Lloyd Thompson. The two companies are rumoured to be in early negotiations, and a merger would form a broking giant worth around £1bn.
Heath Lambert head of legal William Bloomer declines to comment on the speculation, but cheerfully admits that the past few years at the company have “been a bit of a rollercoaster ride”.
Since joining the broker in December 1999, Bloomer has overseen a full-scale corporate restructuring, 30 disposals and has rid Heath Lambert of a massive pensions deficit. A takeover bid will be easy in comparison.
When Bloomer joined Heath Lambert it was a brand new company, formed from a merger between Lambert Fenchurch and Heath. Both merger partners were long-established London brokers that had gone through several different structures in their combined 150-year histories.
Within a short space of time, Bloomer became Heath Lambert’s head of legal, and later company secretary to the board of Heath Lambert Group Holdings. He currently heads a team of three lawyers, managing a legal spend that in a normal year exceeds £500,000. However, extraordinary pieces of work push up the budget – advice for the pensions scheme, for example, cost £5m.
The newly merged Heath Lambert looked at a possible IPO in 2002, but was hampered by the stock market crash at that time. Instead, the company embarked on a period of restructuring and refinancing to eliminate debt.
“We realigned carefully from being a wholesale broker to being a retail broker,” explains Bloomer. During 2004 he and his team oversaw the disposal of 30 subsidiary companies, including some based as far afield as Australia and Central America.
But the restructuring and the disposals failed to alleviate Heath Lambert’s pensions deficit.
Bloomer structured the solution with Berwin Leighton Paisner‘s (BLP) Andrew Pipe and David Dennison acting as pensions advisers and Herbert Smith restructuring partner Stephen Gale overseeing. Heath Lambert’s management company was put into administration, which meant that the Pensions Regulator became involved. A new holding company bought Heath Lambert’s business and raised new equity from banks. Everything was governed by the brand new Pensions Act 2004 and the Pensions Protection Fund, which came into force in April 2005, and Heath Lambert’s deal was scrutinised closely because it was the first major pensions restructuring to use the legislation.
“It was quite groundbreaking stuff; it was a pretty fraught time,” Bloomer admits. “It was quite scary because there was a myriad of issues that came in along the way, and we didn’t know whether it was actually going to succeed.”
Bloomer says the advice given by BLP and Herbert Smith was excellent. He chose the firms over the broker’s historical adviser Slaughter and May, which traditionally worked with Lambert Fenchurch and which was instructed on the 2003 restructuring.
“We don’t really have a relationship with Slaughter and May any more, other than on very small matters from the previous restructuring,” says Bloomer. “They won’t be part of the group of law firms that I would consider in the future, given our size.”
The majority of legal work outsourced by Heath Lambert goes to CMS Cameron McKenna, but Bloomer says this has nothing to do with the fact that he trained at the firm. Reynolds Porter Chamberlain is the broker’s other regular adviser. As well as the ever-vital value for money issue, Bloomer looks for “somebody I feel comfortable with; somebody who’s willing to try to understand my business”.
He has turned to employment specialist Fox Williams to deal with a high-profile dispute with rival Aon. Aon is alleging that Heath Lambert poached staff from its Newcastle office and has filed claims against the broker and a number of former Aon employees.
“We’ll fight them tooth and nail on it,” Bloomer says. “It’s a David and Goliath situation – they think they can instruct lawyers and threaten us.”
Bloomer believes that the insurance broking community is still stuck in a rut, thanks in part to century-old legislation.
“The law’s an anachronism,” he says with feeling. “Everybody involved in insurance transactions is still too ready to press the button and go to a lawyer.”
Nevertheless, Bloomer will continue to play a key role as Heath Lambert’s in-house lawyer as the broker moves forward into a more secure future.
Head of Legal
|Legal spend:||£500,000 plus|
|Reporting to:||Chief executive Adrian Colasso|
|Main Law firms:||CMS Cameron McKenna, Fox William, Herbert Smith, Reynolds Porter Chamberlain|
|Company solicitor and company secretary:||William Bloomer|
|Education:||Law, London Schools of Economics; College of Law, London|
|Career:||1992 – Cameron Markby Hewitt, London; 1997-99-Cameron McKenna, Hong Kong; January 2000-Heath Lambert Group|