Howden Ireland, the insurance-to-mortgages broking company, sees further opportunities for small deals in the general insurance market after a wave of industry consolidation in recent years, its chief executive said.
The UK-owned company, which entered Republic through acquisition in 2019 under the Aston Lark name, has agreed four bolt-on transactions so far this year, bringing the total to 33.
They include Keane Pension & Investment Consultant and Alliance Insurance Brokers in Dublin, John A O’ Sullivan Insurances in Clonmel, Co Tipperary, and a deal agreed last week, the details of which have yet to be announced.
Howden Ireland is now among the five largest general insurance brokers in the market, with about €300 million of gross written premiums a year, and the largest mortgage intermediary group, which wrote close to €600 million of home loans last year, its chief executive, Robert Kennedy, said.
READ MORE
Its financial advisory business has more than €600 million of assets under advisement, he said.
The general insurance broking sector has been the subject rapid consolidation over the past decade. Many acquirers, including Howden Ireland, are ultimately backed by private equity firms, which are attracted to relatively predictable revenues from commission income.
Owners of brokers, on the other hand, have been tempted to sell by the strong valuations being achieved in the industry amid issues over succession planning and need for investment in many businesses in an era of growing compliance and regulatory demands.
Howden Ireland has focused on acquiring small family-run outfits, rather than multi-branch businesses, since it assembled a platform in 2019 by buying and merging Robertson Low and Wright Insurance Brokers.
“There are about 10 brokers around the country that we’d love to have a conversation with in the general insurance space,” Mr Kennedy said. “There may be fewer opportunities than five or six years ago, but there are still some out there.”
He said the mortgage broking sector was still much more fragmented. “We’d like to do deals here, too. But we have a decent platform and expected to do about €800 million of mortgages this year in a growing market, rising to €1 billion next year,” he said.
Mr Kennedy said the financial advisory space was even more fragmented.
“I’d suggest there’s going to be a lot of consolidation here, too. But it’s trickier to do deals because earnings are less predictable as firms typically earn about half [of their fees and commissions] from renewals and half from new business,” he said, noting that recurring income typically accounts for 90 per cent of general insurance broking business.
The original management of more than 85 per cent of the brokerages acquired by Howden Ireland have remained with the group, the firm said. They also typically take 10-20 per cent of the purchase price of a business by way of shares in London-based Howden Group Holdings.
The group also counts private equity firms General Atlantic and Hg Capital and Canadian investment group CDPQ as investors.
