Verlingue is looking to further expand in the UK, and is keen to hunt out appropriate acquisitions in the employee benefits space, according to Mike Latham, chief executive of the French firm’s UK division.
Latham explains that while the firm’s target is to take its UK employee benefit book to approximately £10m by 2028, the organic growth Verlingue has “enjoyed and sustained” to date would only take the figure to around £6.5m by this target year.
“This leaves us a shortfall that we want to plug with some acquisitions,” he says.
In January, Verlingue looked to further cement its position in the UK market with the acquisition of employee benefits consultancy EBCam for an undisclosed sum. This Cambridge-based specialist firm has an experienced team in place that is expected to work alongside the Verlingue team.
“We’re looking for new territories and new talent. This acquisition gave us a fantastic base in the eastern region, not only for employee benefits, but which we will use for insurance brokerage as well,” says Latham.
In 2021 Verlingue set itself a target of increasing its turnover by 300 per cent in the next three years by bringing new firms and individuals into its organisation. By Latham’s own admission, this goal was not met.
“The acquisition targets weren’t there that we wanted. We weren’t prepared to overpay for businesses that we didn’t value. However, the employee benefits side of the business has really stayed on track with what our ambitions were,” he says.
In previous years, Latham has described M&A activities in the sector as “alarming” and “overheated”, yet he is also eager to clarify, and explain how Verlingue is approaching its own growth differently.
“I maintain that M&A is definitely overheated, alarmingly so around the general insurance space, yet I think there are more opportunities in the employee benefits arena, which is what we’re targeting. We’re still predominantly a general insurance broker, and we want to grow the employee benefits exponentially, so it’s more of an equal partner in the business,” Latham says.
Before becoming CEO of Verlingue in 2020, Latham had been group managing director of Finch Insurance Brokers since 2012 (itself part of Verlingue), and previously a regional managing director of Jelf Group, all in roles based out of Manchester.
While Latham is typically based in Verlingue’s Manchester offices, the conversation takes place at the firm’s London offices on Lloyd’s Avenue, the heart of the capital’s insurance district for centuries (Lloyd’s Register
first opened offices on the street in 1901).
Latham says: “It was an attractive opportunity to move, but I think it was more by fortune than desire when Verlingue ended up here. But we’re happy here, and it’s a great location.”
This appreciation for history and tradition reflects how the company itself operates. It is a family company, currently headed by Benjamin Verlingue, the fourth generation of the family to hold the top job at the company, which was founded in Brittany, France in 1933.
This structure stands in contrast to many other competitors in the employee benefits space which are backed by private equity.
Latham says: “Verlingue has minimal debt, and it doesn’t have short term pressures. There aren’t worries about interest rates changing, there aren’t concerns that the private equity company that owns us is going to sell, and then we don’t know who the next owner is. We find this to be a real benefit with clients and with talent, being in the position to say Verlingue will remain independent and family-owned long after I’ve retired.”
Being part of a Europe-wide organisation has also afforded Latham the ability to fully appreciate the distinct differences between the employee benefits system in the UK compared to other territories on the continent.
Latham says: “There’s a lot more statutory benefits across Europe. There’s a lot more flexibility in the UK, with a low level of statutory benefits and a higher level of voluntary benefits. This gives businesses a lot more scope to be creative in the UK and ways to try to find more attractive solutions.”
However, when it comes to discussing how much direct influence the head office in France has on UK operations, Latham is keen to underline the hands off approach.
“Since I joined in 2012 it’s never felt like there’s been a French intrusion, or a French intersection. It’s always felt like a family business in France that’s highly supportive of its international substituents,” he says.
Latham is also based in Huddersfield, the Yorkshire town known as the originator of rugby league. He himself played the sport for fourteen years as a forward, until coming into the office “with a black eye and a thick lip” became less manageable.
This sporting background may also have left Latham with a keener eye for the necessity of preserving and elevating talent when it comes to building a successful team. Currently, Verlingue UK is on a push to foster talent in the employee benefits sector, having learned from previous mis-steps.
“If you go back three years, we were spending far too much on recruitment fees, and we weren’t happy with the results that we’re getting. We decided to break the cycle, bite the bullet, and just concentrate on growing our own talent”
Latham has since overseen the introduction of an apprentice scheme at Verlingue, averaging from 10 to 12 trainees being brought on board at the firm in each of the past three years.
Latham is also of the view that some of the issues within the market are structural, and he welcomes efforts by the Financial Conduct Authority to provide clarity on the main rules relating to workplace savings schemes in an attempt to address this.
Yet he is also of the view that much of what is holding the industry back comes down to a corporate mindset: “The market needs to differentiate more,” says Latham. “There are too many organisations that try to be all things to all men. I think it’s much better when you pick a segment of the market which you can excel. To excel, you have to be better or cheaper, and I think we’d always rather be better. I think much of the market is focused on trying to be bigger, which they think will allow them to be better. I don’t necessarily think it will,” he continues.
On the horizon for the employee benefits space is also the proposed changes to salary sacrifice schemes. From 6 April 2029, the government is capping the national insurance exemption on salary sacrifice pension contributions at £2,000 per year, with any amount sacrificed above this limit subject to employee and employer NI contributions, although current proposals have been met with opposition in the House of Lords.
Latham is at least thankful that, unlike the rise on national insurance contributions announced by Chancellor Rachel Reeves in the 2024 budget, with salary sacrifice reform there is more time to prepare for the changes and less immediate margin pressure for companies.
“We still think salary sacrifice has got a place within employee benefits,” says Latham. “We’ll adjust. We’ll look at different methods and measures to provide benefit for people to invest,” he continues.
Latham also feels that Verlingue is prepared for the Value for Money framework, in spite of potential issues around ‘benchmark hugging’ which plagued rollout of a similar initiative for schemes in Australia. He says: “[With VFM) the FCA is looking to protect customers, and the intentions are pure. However I think sometimes organisations get lumped together but they don’t necessarily look and feel and smell the same.”
Change is certainly on the horizon, but Latham says that while this may prove challenging, it will present opportunities for firms like Verlingue that are looking to develop their employee benefits proposition.