Towergate Partnership is now heading for £2 billion turnover and Cullum has been showered with awards for his achievement. GrowthBusiness meets the UK’s Entrepreneur of the Year.

Insurance is not a sector associated with an inspiring sense of entrepreneurial spirit – ironic really, considering embracing, assessing and managing risk is the raison d’être of this abstruse game. In spite of this, however, convention and tradition dominate a sphere stereotypically controlled by the old-boy’s network, where your school tie and Oxbridge badge carry more kudos than achievement, ability and accomplishment.

In this formal, stifling, corporate environment, Peter Cullum is a breath of fresh air. Executive chairman of Towergate Partnership, he’s enthusiastic, innovative and more than a little unorthodox. He’s built a colossal insurance group with annual turnover of £1.35 billion, amassed through an aggressive acquisition strategy of specialist insurance agencies. But he has maintained a small-company culture, permeated with his unconventional approach to underwriting. And his success has just earned him the prestigious title of UK Entrepreneur of the Year at the recent Ernst & Young national awards.

‘Research into the perception of insurance in the UK suggests we’re marginally less popular than estate agents!’ he laughs. ‘Insurance equals dull in people’s minds, so we’ve strived hard to make Towergate something atypical. At the core of that is our company culture.

‘It’s a cliché but I want the 3,000 people we employ to enjoy it, as that will filter through into the manner in which we deal with clients. To prove it’s not just management rhetoric, we’ve even appointed a director of fun, who organises trips out and family away-days for staff. Last year we took 600 people to Brussels as a thank you for their hard work.’

Breaking with the norm

The story of the birth of Towergate is a testament to how Cullum, now aged 55, has always shied away from the obvious business path. Born and educated in Norfolk, he was a high achiever from an early age and went on to earn an MBA at City Business School, London. At 21, he then became the youngest person ever to become a Fellow of the Chartered Insurance Institute.

‘It’s pretty much an automatic route into a corporate life of number crunching,’ Cullum muses. ‘By the time you’ve reached that stage, you tend not to consider being an entrepreneur. I became the archetypal corporate man.’

He joined Royal Insurance Group in 1969, moved to Commerical Union in 1975 and on to ITT London & Edinburgh seven years later. Then came the turning point – being headhunted in 1991 to join small, struggling insurance firm, Economic Insurance, as managing director.

‘The company was in difficulties and it was up to me to turn things around,’ he says. ‘It was my first taste of running a business and it was intoxicating, I loved it.’

The management team engineered a buyout in 1993, purchasing the company for £6 million with the financial assistance of venture capital firm Candover. ‘They invested most of the £6 million,’ says Cullum, ‘with a £300,000 total contribution from the rest of us. Five years later, we sold the company to Hiscox, the Lloyd’s operation, for £32 million. That just goes to show what the incentive of venture capital backing can do for you!’

Rebel with a new cause

Through successfully reversing the company’s fortunes, Cullum caught the entrepreneurial bug. At the end of a year at Hiscox after the takeover, he decided corporate life at a large insurance firm was no longer for him and abandoned ship. ‘I wanted to be my own boss again,’ he confirms.

So, in August 1997, he and a few colleagues launched Towergate Underwriting. Cullum recalls, ‘It was like rebelling against our corporate destiny! We set ourselves up in a room in Hornchurch, Essex, with a few boxes of papers and a telephone – that was it. Rather amusingly, we decided to set the ridiculous target of reaching £100 million turnover in five years! It was a pretty audacious attitude for a start-up, but we weren’t arrogant, just very ambitious.’

Looking back, Cullum admits he was motivated entirely by the buzz of starting a business. ‘It was foolhardy and entirely insane. I had money in the bank so I could’ve done something much more sensible and stuck with corporate life, instead of risking everything on a new venture.’

Driven by the desire to run an insurance operation differently to competitors, the Towergate team came up with a USP that he calls the company’s ‘Pepsi Cola formula’.

‘As the saying goes, I could tell you what that formula is but then I’d have to kill you!’ he jokes.

Whatever it is, it’s certainly worked. A recent merger of Folgate, the brokering company Cullum founded in 2002, with Towergate Underwriting now makes Towergate Partnership the largest provider of specialist insurance solutions, with turnover expected to top £2 billion by 2006. The merger also provided an opportunity to buy back the majority of The Royal Bank of Scotland’s equity stake in the business, so management and staff now own 97.5 per cent. Four major banks now provide debt funding for the company’s growth.

Cullum continues, ‘In eight years we’ve made 105 acquisitions of specialist agencies, giving us huge depth of service. We specialise in niche insurance solutions and have a far from standard proposition and can offer insurance in a vast range of areas: holiday homes, luxury yachts – you name it, we’ll insure it.’

Cullum rejects the idea that Towergate is a monster gobbling up independent operators. ‘We’re not into turnover above everything else. We pay top dollar for the companies we buy, we don’t nickel and dime over the price. And the CEOs of those firms retain a significant stake. I’m a firm believer that key personnel should have a vested interest. That’s exactly why I insist that Towergate staff have equity participation – they share two per cent of the business and all staff are eligible to own shares in the company after one year’s service. It galvanises their efforts and rewards results.’

His benevolent approach to business deals and managing staff also spills over into charitable efforts. ‘We have a new scheme where we ask customers to add £2.50 to their insurance premiums as a donation to charity, and we then match that amount. We’ve already raised more than £250,000 for hospice charities in this way and plan to build our own hospice. I believe in business you should make money, have fun and do good – these three aspects are not mutually exclusive.’

Winning streak

So how does he feel about winning the UK Entrepreneur of the Year award last month, beating well-known names like Coffee Nation, Friends Reunited, Toni & Guy, and even the inventor of Air Miles?

‘Getting through to the national finals felt like a huge achievement against a long list of famous brands, so to then win was immensely gratifying. And there was an extra surprise when I found out afterwards that one of the panel of judges was a venture capitalist from the original firm that funded our MBO in 1997. He said afterwards he felt proud to think that he’d played a small part in my early days as an entrepreneur, helping me to start out on the long road to where I am today.’

Reflecting on how far he’s come from being a cog in a corporate machine to award-winning entrepreneur, Cullum says, ‘I’ve learnt not to try and do everything myself. I know entrepreneurs who do that and I think they’re nuts! The business becomes limited by your own limitations. You’ve got to recognise you need great people around you and let them get on with it.

‘Too many leaders hold on for too long and stifle the growth of the business. I get up every morning and look forward to coming to work. The day I lose that buzz is the day I’ll hang up my boots.’