5 pro tips for painless portfolio transfers


Broker consolidation is a well-known theme, particularly in the UK.  Market commentary is, however, mostly centred on the revenue of the combined entities.  A (predictably) much less discussed outcome of this consolidation is that, as a result, many brokers pick up sizeable “orphan” portfolios.  These are non-core portfolios which are often ex growth.  Given that most large brokers measure their performance on growth, they are performance-destroying (although often these portfolios also generate lots of cash).

These portfolios also often create IT headaches: multiple, often sub-scale and almost certain expensive-to-maintain legacy admin systems.

If brokers can forgo the cash, they may be well advised to sell these portfolios to players for whom the portfolios are a better strategic fit, and who can therefore offer good value.  For example, a small player with a focus on a particular niche might be able to arrest steady declines in volumes or upsell customers through a more targeted proposition.

Many of these “private” deals aren’t announced, but as an example we played the deal manager role on Marsh’s disposal of its specialist motor business in Kendal to Principal Insurance in 2015.

But portfolio transfers are tricky, and your execution options and financial profile of the deal differ depending on whether the sale is broker to broker or broker to insurer.  Here are five practical things to get right in your process:

If you’re selling to an insurer, remember you’ll have a c. 14 month transfer period

If you’re selling to an insurer who is not the underwriter of the entirety of your current portfolio, remember that you’ll have to do a roll-over deal.  (An insurer obviously can’t administer another insurer’s policy.)  This means that you have to manage a relatively long wind-down of your operations which creates HR challenges and reduces the amount you can recognise upfront, for example.

Pro tip: Make sure that your counterparty has a competent onboarding manager who can work collaboratively with you to design the roll-over process.

The Data Protection Act is a major logistical headache

If you transfer a portfolio, then the Data Controller (as defined in the Data Protection Act) will change.  If you hold sensitive personal information about your customers, for example data about their health, then you will almost certainly have to seek your customers’ explicit consent before transferring their data.  This is a major headache: you’ll need to send relevant customers a letter with a stamped and addressed envelope to increase your response rate.  Obtaining these SAEs is a surprisingly large headache – a good example of an unexciting but significant critical path item.

Pro tip: Get a proposal on your DPA approach in to your compliance team asap and be prepared for a protracted internal negotiation if you want to avoid impossible-to-achieve guidelines.

Customer Ts & Cs

Inevitably you’ll have to take a view on some issues such as DPA rules.  If you’re lucky, you’ll get 10% response rate – mostly from customers who take the opportunity to have a rant about corporate greed.  At this point you’ll wish that you had reviewed your customer Ts & Cs the previous year.  Your life will be much easier if there are provisions to allow the transfer of customer data in the case of corporate transactions, for example.

Pro tip: If there’s a chance that you’ll be selling a portfolio any time soon, get a lawyer to make sure your Ts & Cs are fit for purpose (and not just for data transfer issues).

Third parties will slow you down: engage early

Once the process starts, you’ll want to move as fast as possible.  At every turn, third party processes will conspire against you.  The challenge with portfolio transfers is that most contracts are much less well set-up to handle them compared to transfers of whole entities.  For example, if you’re transferring a team with the book, you may well want to transfer their office.  That requires the lease to be assigned, and this unleashes a world of hassle regarding condition surveys, negotiations over deposits and the like.

Pro tip: Identify all third parties connected to the portfolio and warm them up by communicating your intentions before you need them to do anything.

Focus on HR processes

A portfolio transfer inevitably has implications on your staff.  Broadly speaking, staff have the right to follow their work, which means that if you sell a portfolio to someone else, people working on that book have a right to employment with the purchasing entity.  If the purchasing entity does not require these employees, then it is they, not you, who makes them redundant on the day of the transfer.  Whether staff will be retained following the transfer or not, it’s important that you treat them with courtesy and within the law.

Pro tip: Your process will get buffeted by HR law and so you need a great HR lawyer involved early.  You’ll also need great HR people to manage the process.


Various members of the Oxbow Partners team have extensive experience of transactions.  We advocate the “deal manager” role on the sell-side, about which we have written a separate blog post. If you have M&A on the horizon, give us a call.

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About the author

Chris Sandilands, ACII is a Partner at Oxbow Partners. Chris advises (re)insurers and brokers on a range of strategy topics and M&A. Chris started his career as a D&O underwriter at Munich Re, before joining Oliver Wyman, the consulting firm. You can reach him at csandilands@oxbowpartners.com.

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