Ardonagh, one of the UK’s biggest privately owned insurance brokers, has launched an asset management arm as it steps up its buy-and-build strategy after last year’s £2bn refinancing.
The group has also agreed its first US acquisition: to buy AccuRisk, a healthcare insurance specialist based in Chicago, in a joint venture with New York-based insurance services provider Amynta Group.
“What we are effectively doing is setting ourselves up almost as a private equity investor,” David Ross, chief executive of Ardonagh, said in an interview. “We are a link in the chain between a really substantial, entrepreneurially driven business and traditional capital.”
AccuRisk will sit in the newly created Ardonagh Global Partners, alongside two other majority stakes announced since February: Resilium, an Australian broker of business and personal insurance, and HWF Partners, a specialist in coverage for M&A transactions that has offices in London and Frankfurt. Ardonagh paid a total figure approaching £100m across the three deals, it said, declining to provide exact numbers.
Ardonagh Global Partners is to be run by Des O’Connor, who was formerly chief executive at Bravo Group, a UK broker network acquired by Ardonagh last year.
Each acquired business within the unit has an established leadership team and a substantial minority interest, said Ross. “If you look at Ardonagh as a holding company . . . we haven’t changed the brands of any of the companies we have invested in.” The group includes high street broker Swinton and motorcycle insurance broker Carole Nash.
Ardonagh itself is majority-owned by US private equity investors HPS Investment Partners and Madison Dearborn Partners. The insurance group announced a £300m facility for acquisitions last year as it raised fresh capital from Ares, private equity group KKR and Canada’s Caisse de dépôt et placement du Québec.
Ross told the Financial Times that Ardonagh could spend as much as £1bn over the next three to four years on bolt-on deals.
The insurance broker has ready access to capital without having to pursue a stock market listing, Ross added, citing the short-term bias of the quarterly earnings cycle and the “distraction” of catering to public shareholders during the Covid-19 pandemic as good reasons for staying private. “I don’t think our top team will think going public is necessary or desirable.”
In Ardonagh’s earlier guise as Towergate, the company was caught in a battle between rival creditors six years ago after a prolific period of dealmaking gave way to a drawn-out restructuring.
Towergate’s approach “was that they would buy a company and go, ‘you can come in and you don’t have to integrate’”, Ross said. A portfolio of hundreds of underlying businesses became “unsustainable”, he said, as regulation tightened.
He draws a contrast with Ardonagh’s strategy. “We don’t do any deals where companies aren’t prepared to integrate completely.”