Source www.trendwatch.co.uk 1 September 2004

January 14 2005 is a date that will soon be engraved on the hearts of anyone managing or owning any insurance company, large or small. On that day, almost all general insurance companies, including insurance brokers, will be regulated by the FSA.

Trendwatch publications is, of course, also regulated by the FSA. As a media business, compliance with the massive FSA rule book is considerably less onerous than it is for business that hold client money for investment or insurance purposes. Even so, grappling with the FSA can be like mud wrestling a multi-headed hydra.

To give one small examplee, we recently found out that, to add letters Ltd after ourname )no other changes to the business whatsoever) requires the completion of between 50 and 60 pages of forms and the preparation of much other supporting documentation. The FSA will not even deign to look at it unless it is accompanied by a cheque for 1,500. If everything then seems to be in order, the FSA undertakes to deal with the matter within 6 months.

If, in our infinte naivete, we had failed to realise this palava was a legal requirement, the MOther of All Parliaments has decreed that we would be committing a criminal offence, and liable to be detained at Her Majesty's pleasure at a house of correction and her learned judge's choosing.

This is what the FSA regards as'light touch' regulation which minimises disruption and cost ot businesses.

Now imagine how tricky things can get if you attempt something really complicated such as taking on a member of staff.

The FSA estimates that it already has about 10,000 in the mortgage and general insurance field by the short and curlies. It estimates that at least another 10,000 business will be dragged kicking and screaming into the brave new world of 'light touch' regulation. Around 2,500 insurance brokers will be lightly touched by the FSA on January 14.

But, as everything in life, one mans Kafkaesque nightmare is another man's business opportunity. Which brings us to Broker Network Holdings (BNH)

BNH floated on AIM as recently as May this year (raising 2m in the process), so most investors will know little about it, if indeed they've heard of it atall. We're recommending it because we feel that burgeoning profitability will soon make it a lot better known.

As the name suggests, BNH exists to build a network of independent insurance brokers, all operating within the BNH framework. This follows a path wellbeaten by IFA's, accountants and dentists. BNH is the longest established player in its field and believes that it has a stronghead-start, and a great deal more credibility than other 'me too' imitators.

The system works like this: as an independent insurance broker, you undertake to pay 95 a month to BNH. You also undertake to pass all your insurance business premiums through BNH. BNH places the insurance business with the giants such as AXA, Norwich Union, Royal and Sun Alliance and Cornhill. The members receive enhanced commission from the insurance companies because of the preferential status granted to BNH. Since BNH deals with the placing of the insurance, this greatly reduces the credit risk of the individual members.

BNH takes 1.5% of the premiums from its members and, in return, provides members with a number of valuable support services, including access to Lloyds of London, centralised back-office IT support, marketing assistance, access to e-commerce, staff training and development, business management and monitoring... and FSA compleance support.

BNH is also prepared to purchase broking firms outright where the opportunity presents itself. There are believed to be a large number of small owner-managed brokers where the owner is approaching retirement. For many of them selling theri business to BNH, typically for around 0.3m, rather than grappling with the FSA, is probably an attractive option. So far BNH has acquired 9 such brokers.

Since it was founded in 1994, it has absorbed 133 brokers into its network and plans to acquire about 90 more over the next 5 years. Out of the estimated 19bn paid in insurance premiums in the UK every year, an est 80% is handled by insurance brokers. Most of this goes to through the big brokers, but about 3bn a year (typically commercial rather than personal business) is processed by the 2,500 small so-called 'community brokers' that form the BNH network.

hat represents the extent of BNH's market pond.

At time of floatation, BNH est that no more than 12% of its target broker had aligned itself with any particular network. Clearly there's plenty of scope for growth.

The company is already profitable. Its last full year results were published in July and showed a profit for the principle trading subsidiary - the PLC holding company had not yet been created - of a record 0.77m up rom 0.70m. 27 new members were taken on.

Brewin Dolphin reckons it will make 1.77m this year, rocketing to nearly 3m in 2005-06. If these estimates are correct, it puts BNH on a forward p/e of 6, which is extremely low for the sector, especiallyfor a company whose profits are growing at such a rapid rate

BUY

legend,

Take a look at ADVFN board - it has come alive!!

ramu

I do go on there from time to time... i rarely post. Who are you on there??!!

Have just had a look, I was interested to read that bloke called Sharegod was trying to pick up stock but couldn't. One MM wouldn't deal 10k and the other offered 112!!! Shocking.

I have faith, I am not concerned a bit. You will be rewarded by staying in.

Legend

Legend,

I have not posted in ADVFN board for BNH. Anyway, you will spot me easily - I am known as ramu231. What are you known as?

Ramu

why the fall - is anyone aware of the reason apart from profit taking or is it this vat thing - like others I am more inclined to top up but when is the next newsflow due?

I have topped up today...

No reason oxman for fall... the chairman only sent out a newsletter a month or so ago explaining how well things are going...

Nothing to worry about IMHO.

Hi all,

Just to let you know that I am still holding and are happy doing so... just a lack of newsflow has caused the price to drift back.

Story still the same. I still think these are worth 1.50 and intend to hold until it at least gets there.

I am very conservative with my forecasts and I think it is best to look at things pessimistically rather than too optimistically (i hope those two long words are spelt right!!).

Would love to hear from any of you.

Remember, he who dares, wins, he who hesitates don't. Just watch this space..... ;-) As always time will tell.

Regards, the legend

The smart ones will stay in this stock... Looks like there has been interest these past few days.. perhaps an RNS soon??

Good luck all

A bit quiet on the old BNH front... Was glad to see an acquisition on april 1st. Only one more now to reach the target. I am sure they will get it.

Would expect to get some coverage soon as it is coming up to a year since they floated.

Everyone else still holding??

Legend

Hi again all, there is a broker meeting tomorrow which should be good. My broker is attending. I will let you know what went on.

Legend

From all I have heard and read about Broker Network it is a quality company and going places. So why the nose dive over recent weeks?

It wasn't very long ago that this was touching 140

Thank god someone has some sense....

Absolutely right Balli. In fact... my broker went to the meeting on friday. Apparently:

Everything is in line if not better.

At LEAST one more acquisition WILL be announced before results (which means the target WILL be hit) plus there are plenty more in the pipeline.

The acquisitions already made have on average 1.1 earnings instead of the budgeted 1.3, plus the acquisitions have performed much better than expected.

Also since regulation date, BNH has seen more and more enquiries from brokers that have had enough.

All in all, I am happy to hold and see no reason to panic. With 3m cash in the bank the group still look cheap.

If i could afford to I would fill my boots now.

would buy more, but irrational fall in sp puts me off - still think it is oversold and on positive newsflow should bounce strongly, thanks for update from meeting.

the Revenue are taking a fresh approach to certain sevices in the insurance sphere....so there may be a chance that vat could apply to part of the income of broker network. the introduction of an element of vat would not be good

i can say that it is 100% definite that the operating costs and difficulties in the insurance broking world are and will become much much more difficult...if not impossible. if insurance brokers struggle and do not florish financially then that is bad , in the long run, for broker network. in addition the horrible rules and regulations make it much for difficult for broker network to keep a clean nose

insurance brokers and insurers have greatly underestmated the overall impact of regulation vis the FSA

Legend, how do you think introduction to VAT will affect the price in BNH?

Quite simply, I don't think that VAT will directly affect BNH.

Can't wait until the results though ;-)

Legend,

What's your personal target SP for BNH? Thanks.

Ramu

1.50-2.00 100% for sure.... absolutely no reason why it shouldn't be there..

Broker Network Holdings plc
3 May 2005


Date 3rd May 2005
For Immediate Release


BROKER NETWORK HOLDINGS PLC (AIM:BNH)

COMPLETION OF THE ACQUISITION OF WYNDALE INSURANCE BROKERS


Broker Network Holdings plc ('Broker Network' or 'the Company'), the network
organisation for independent community insurance brokers, is today pleased to
announce the completion of the acquisition of Wyndale Insurance Brokers ('
Wyndale') of Tottington, Bury, Lancashire.

The purchase of Wyndale, which was announced on 1 April 2005, has been completed
following approval by the Financial Services Authority of the change of control
of Wyndale.

This is the eleventh acquisition made by Broker Network since flotation last May
and is in line with the Company's acquisition strategy of purchasing the
businesses of network members whose principals are looking to exit or retire. A
condition of the deal is that the purchase price parameters will remain
confidential. However, the Company confirms that this latest acquisition is
broadly in line with the other ten acquisitions made to date.

Commenting on the acquisition, Grant Ellis, Chief Executive Office of Broker
Network said:

'The acquisition of Wyndales is a classic example of the Broker Network business
model in action. Wyndales were a founder member of the network, joining us in
1995. After a successful ten-year relationship, the principals are nearing
retirement and have concluded that a sale to Broker Network represents an
excellent opportunity for them to exit the business at a fair price. For us, we
are acquiring a quality established business in the Bury market on
earnings-enhancing terms.'


For further information, please contact:

Broker Network

Grant Ellis (CEO)/ Julie Hale (FD) 01423 877833

Teather & Greenwood
Stephen Austin, Corporate Finance
Richard Kirkham, Sales 020 7426 9000

Buchanan Communications
Kelly-Ann French/ Eric Burns 01943 883990


This information is provided by RNS
The company news service from the London Stock Exchange

Thanks ramu... didn't have time to put this on this morning

Yes very bullish...

According to my broker, (who attended the brokers meeting) said that BNH had acquired the brokers lots cheaper than they had budgeted, and also the acquisitions have performed a lot better than expected!!!

I think the results will see this takeoff.

they are just too cheap at this price. All IMHO of course.

Thanks ramu... didn't have time to put this on this morning

Yes very bullish...

According to my broker, (who attended the brokers meeting) said that BNH had acquired the brokers lots cheaper than they had budgeted, and also the acquisitions have performed a lot better than expected!!!

I think the results will see this takeoff.

they are just too cheap at this price. All IMHO of course.