The Ardonagh Group is selling its personal insurance business in a deal that will give Chief Executive Officer David Ross an £800 million ($1 billion) war chest for further acquisitions in specialist insurance broking.
Ardonagh has sold its Atlanta Group division to UK insurer Markerstudy, in a deal that values the unit at £1.2 billion, according to a statement on Thursday seen by Bloomberg. The deal was financed by Pollen Street Capital and Bain. Pollen Street will remain the majority owner of Markerstudy.
As part of the deal, Ardonagh will also take a minority equity stake in the combined business valued at £400 million, according to people familiar with the matter.
With the sale, Ardonagh offloaded a division that made up a fifth of the group and contained home insurer Swinton, van specialist Autonet and motorcycle underwriter Carole Nash. The deal will free up cash the company can use for overseas acquisitions, Ross said.
The company is looking at opportunities in Continental Europe with Scandinavia as a focus, plus deals to build on last year’s acquisitions in Australia and Portugal, Ross said. The goal is to better compete with insurance giants such as Marsh & McLennan Cos., Aon Plc and Willis Towers Watson Plc.
“You have to have the scale to deal with the big brokers because when someone puts a large amount of business into an underwriter they have more negotiating power,” Ross said in an interview.
Ardonagh plans to compete with its larger rivals by remaining private, maximizing its flexibility to react quickly to changing circumstances, according to Ross. “Our plan is to create a sustainable model that allows us to remain private for decades,” he said.
The business, whose chairman is ex-Financial Services Authority chief executive John Tiner, seeks to have reporting standards similar to a public company, but wants to avoid other burdens associated with listing.
“Twenty years ago, going public was a reward for success. Now it seems like an extraordinary punishment,” said Ross.
Formed in 2017 from a combination of broker Towergate and four other entities, Ardonagh is majority owned by HPS Investment Partners and Madison Dearborn Partners. The company operates as an independent insurance broker with four units – international, specialty, advisory and retail.
Two years ago, the Abu Dhabi Investment Authority acquired a stake in Ardonagh valuing the company at $7.5 billion.
Ardonagh has grown to become one of the world’s 20 largest brokers, having made 130 acquisitions since 2017 and spending about $1 billion a year on deals in recent years. It generated $2 billion in pro forma revenue in the year to June 30.
The combined business of Atlanta Group and Markerstudy has almost 8 million customers across the home and motor insurance businesses with over £3 billion in annual premiums. The company will eventually employ around 7,300 people across the UK.
Fenchurch Advisory Partners advised Ardonagh on the deal, while Markerstudy and Pollen Street were advised by Continuum Partners.
“A merger in Atlanta has been a long-term ambition of ours,” said Kevin Spencer, chief executive of Markerstudy. “The strong alignment of our models and shared values and ambitions cannot be ignored.”
Photo: City of London; photo credit: Jason Alden/Bloomberg
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