Millionaire maker: From setting up one of the first consolidators to becoming an investor in start-ups, Chris Blackham reflects on the highs and lows of selling-up and shares his vision for the future
Chris Blackham is a name many will recognise following his tenures at Layton Blackham and latterly Bluefin.
Reflecting on the start of his career Blackham admits he must be one of the only people in the industry who chose an insurance career. His family owned a firm in Liverpool, a marine specialist, now known as Groves, John and Westrup.
“It’s in the blood,” he jokes.
Indeed his son James has also followed him into the broking profession, taking a role at Vizion Wealth.
“I come from a long family of insurance brokers and underwriters in the Liverpool market. And so I was sad enough to choose insurance rather than insurance choosing me.”
For the most part, since he stepped away from the then Axa-owned Bluefin in 2008, he has been in the insurance shadows.
However, as the market develops, consolidation continues and coronavirus bites, Blackham is keen to meet via video call with Insurance Age, to consider the broker space as it is now, his time as a broker, and talk about his current projects.
"In the first few weeks after leaving Bluefin, I set about designing a new model, the concept of which had been in the back of my mind for many years"
Investment opportunities
His chief activity is as an investor. He details: “My investment vehicle Endorphin, which I run with my business partner Geoff Bradford, has started E-Insurance Trading with Paul Scanlon, where we provide automated online leisure products.
“We have also invested in and grown Aquilla Insurance Brokers which is led by Julian Mungo and is one of the finest property insurance brokers in the country. We have also invested in Gourmet, a speciality coffee business – but that is another story!”
However, the heart of his interest is Vizion, the broker he launched a couple of years ago with John Sims, formerly European personal lines manager at Chubb, England rugby player Jeremy Guscott (“he has become as much of an insurance man as he is the rugby legend”) and Kennedy’s partner, Trevor Davies, at the helm.
Blackham reveals that, soon after he left Bluefin, he began developing a fresh model for insurance broking. “In the first few weeks after leaving Bluefin, I set about designing a new model, the concept of which had been in the back of my mind for many years. It was a completely new general insurance broking business model that could provide local advice by advisers sharing in the ownership of their business,” he explains.
“I was unable to immediately put this into action because of the lengthy restraints I had on exit from Bluefin. However, some years later on the golf course John [Sims] and I hatched the idea to try this initially for high net worth insurance.”
Vizion, he says, is the culmination of that work.
The basic structure is that Vizion Insurance Brokers (VIBL) is the holding company. Each client facing partner sits within a limited liability partnership called Vizion Insurance Solutions LLP. This is an appointed representative of VIBL.
All of the ARs have a stake in the business and Vizion offers its partners back office support and the Acturis platform. In addition they are offered a loan to help ARs who were unable to work immediately due to covenants.
From its inception three years ago Vizion now has:
- a budgeted premium income of £7m this year;
- four directors;
- ten partners; and
- seven full time and two part time staff.
“Not bad from a standing start three years ago with not a single client!” Blackham adds.
One of the things he believes marks out Vizion for quality is its funding model. Blackham uses the family office model (his own) and not private equity to invest in the firm. Blackham has long felt that private equity or VC investment models do not engender the best environment for quality broking and high service levels.
“There is no measure of the harm that has been done to SMEs by call centres and online products because they have not had the right advice but I suspect this is considerable,” he says. Later in the discussion he picks up the point: “You can’t be driven by an exit all the time.”
He refers back to the consolidation model employed by his former firm, Layton Blackham – known as one of the first consolidators. “Our consolidation model was very different from our competitors that soon emerged, which were driven by their venture capital investors to ramp up Ebitda, and consequently value, primarily by reducing costs and increasing commission.
“This was the opposite of our model where we invested heavily in our infrastructure including staff training, modern local offices and IT seeking to build value by providing a sound regional insurance broker that wherever possible stayed and provided local advice.” Of course, nowadays, everyone with a consolidation model insists service is key. However, some operations, for example, have seen regional offices close in favour of ‘centres of excellence’.
He admits then, when it came to sell Layton Blackham, lots of questions were asked about why its Ebitda was lower than its competitors.
"We were really the first consolidator and we were the first one of the first consolidators to exit… I would have liked to have the control to take it onto the next stage, but I didn’t"
Quality
“We always drove quality and a long-term sustainable model and that was a major problem when it came to selling, because when Axa made an offer for me, they knew we were a great business, they then had to justify it over in uh, Paris and they said, well, this business isn’t making a lot of money.”
Despite their concerns, the deal went through in 2007.
However, Blackham did not stay with Axa for very long.
Turning to his time with Axa and Bluefin he suggests being part of a big, global, corporate world wasn’t for him. “I really couldn’t cope with working in a big company or for a big company that was international being driven from Paris really. I quickly negotiated my way out.”
The Layton Blackham name is no-more – along with other industry stalwarts such as Jelf and Giles. Does Blackham regret the loss of those brands and flagships?
“Emotionally, I didn’t mind the Layton Blackham and name going, you’ve got to be realistic. What I hated, and this is still happening, is when you get, should we say an accountant-led model take over the business, it rips into pieces basically. “To be quite honest with you, I got quite depressed when I saw the damage that was done to the business and the people that I’d built up. If I have got regrets in my life that is one of them.”
Despite that, he concedes the sale was a timely one. “It was the right thing to do at the right time.
“We were really the first consolidator and we were the first one of the first consolidators to exit. If you look at what’s happened to some of the others I think it was definitely a good decision from the shareholder point of view. “I would have liked to have the control to take it onto the next stage, but I didn’t.”
Blackham explains that, after he left Bluefin, he struck out with a focus on two sectors charity and property. He had planned to retire after selling his business but found that, at aged 50, it wasn’t the right time.
Cycle4Good
While he isn’t investing in insurance Blackham can often be found cycling far off the beaten track. Cycle4Good is a charity project in which he helps get together all different kinds of people to take part in cycling challenges to raise money for a number of charities. Staff at Cycle4Good, which helps plan the exotic and challenging routes, all volunteer and 100% of funds raised go back to the charity partners, which include Willen Hospice, Aspire, Child Hope and the Poppy Factory. Rides from London to Amsterdam, Milton Keynes to Amsterdam and further afield have been completed, as well as routes through Kerala, India, Nicaragua to Costa Rica and Vietnam to Cambodia.
His first big trip was John O’Groats to Lands’ End. “It is just the most fabulous experience,” he says. “I would recommend it to anybody.”
After Bluefin
“I said to my wife, ‘we can go anywhere in the world, we can do anything we want. What do you want to do?’ She said: ‘I’ve got a life, you know’…It was quite shocking to be honest with you. I’ve been incredibly lucky, but you really have to look at yourself and decide where you’re going next.”
He decided to investigate the property world while he was unable to work in insurance. Alongside this he also developed his interest in the charity sector as shown above.
So far he has built nine executive homes and it has given him experience in the property industry which can be valuable with regard to his involvement in Acquilla.
Blackham says the level of investment he provides ebbs and flows but at some points he has had up to £3m ploughed into the three organisations, with the lion’s share going to Vizion.
As a beneficiary of the Layton Blackham sale, and as one would expect, he isn’t purely focused on work at the moment. Blackham spends a lot of his time taking part in cycling endurance rides and helping to organise charity bike trips. And the current situation has changed what he needs to do day-to-day around the home.
"I was able to make myself and my fellow shareholders millionaires with the Layton Blackham sale… My aim with Vizion is, over the years, to make at least a dozen insurance entrepreneur millionaires
Lockdown life
When the interview takes place, during the lockdown period, he is speaking from an office inside his home near Silverstone. He confesses the lockdown has changed his routines and he has been recruited to help out with his wife’s eight horses.
“I do muck them out, I do pick up the poo. We normally have people come and help but, obviously, at the moment we can’t so we’ve got a new stable boy – me.”
While he is stuck at home like most people he is concerned for brokers and their survival as the coronavirus pandemic hits the world, particularly with regard to how broker customers may be affected.
He explains: “The majority of the acquisitions in recent years have been commercial-based or property-based brokers. Those brokers and, particularly the SME and the larger companies are going to suffer enormously over the next two years and there will be bankruptcies.”
It makes him wonder how companies backed by profit-driven venture capitalist investors are going to cope as Ebitdas potentially plunge. He also predicts that, in terms of M&A, the deals could dry up as Ebitdas in the sector drop.
“I think there’s another side, will all these companies that had a list of potential acquisitions, but if their income is artificially suppressed [due to the pandemic], why would they sell now?”
He adds: “Also if you’re buying, while you’ll be able to buy at a lower price, you’re not going to be able to buy as many businesses with good Ebitdas, which is the measure use to fund the acquisitions.”
In terms of the business he thinks the thread that ties them all together is the fact they were all start-ups.
The reason for this is because Blackham wants to get stuck in and help other entrepreneurs become millionaires after starting his own business with a single desk, but not lead from the front.
“I think once an entrepreneur, always an entrepreneur,” he notes.
And he is very keen to help others develop as business owners.
He explains: “I was very lucky that I was able to make myself and my fellow shareholders millionaires with the Layton Blackham sale."
“My aim with Vizion is, over the years, to make at least a dozen insurance entrepreneur millionaires as a result of the joining us. It is early days but I can see several who will achieve that.”