Briefing: Scaling with purpose – the private equity advantage in insurance

Private equity (PE) investment in the insurance industry continues to be a topic of debate.

Increasingly, I’ve observed a trend where private equity ownership is portrayed as a negative, used as a shorthand critique when brokers compete for talent or acquisition opportunities.

The implication is that PE-backed firms are inherently short-term in their outlook, overly focused on financial return and ultimately less stable or values-driven than their independently owned counterparts.

This narrative is not only overly simplistic, it’s fundamentally flawed. From my experience, private equity investment – when aligned with the right leadership, values and long-term ambition – is not a risk factor. It is a catalyst for sustainable growth and value creation for clients, colleagues and shareholders alike.

I have experienced the benefits of private equity partnership first-hand since the formation of Specialist Risk Group in 2019 and, with the support of various investors, we have transformed from a UK-focused platform to an international specialist (re)insurance group operating across the UK, Europe, and Asia Pacific.

This progress has not been driven by short-termism or financial engineering. It has been fuelled by focused, strategic investment in our people, our infrastructure and our specialisms.

Our investors have backed us to make long-term decisions, whether that’s acquiring and integrating businesses, launching new specialisms or opening a state-of-the-art new headquarters in the City of London to provide a collaborative, high-quality working environment for our colleagues.

Scale thoughtfully

One of the most powerful advantages of private equity support is the ability to scale thoughtfully and invest with intent.

Committing or allocating capital where it aligns with genuine expertise and client need is actually the primary goal of a successful private equity leadership model.

Be it the accelerating of a globalist strategy, driving digital transformation or creating opportunities for people to lead, grow and share in success, investment for change is a fundamental tenet.

Whilst accepting that not all private equity partnerships are optimal, the idea that PE investment erodes culture is one that must be actively challenged.

Just as people make career choices based on varying factors, cultural, economic or otherwise, it is true that a private equity backed business will not suit everybody.

Succesful formula

I am often asked what I think of as being the formula for success. My view is that private equity really ask for four things – consistency, transparency, a culture that is adaptive to change and one that allows for personal commitment beyond a single investment cycle.

And let us not be embarrassed to embrace the fact that PE ownership has allowed many companies to unlock real wealth creation opportunities.

When structured to deliver long-term ownership over many investment cycles, this type of investment can produce far less short-term myopia than the significant annual bonus structures put in place for individuals, which can actively encourage silo thinking without the clear client benefits afforded by a committed and personally invested team.

The ability to attract and retain exceptional talent by providing clear paths to leadership, ownership and personal progression is especially compelling in an industry where succession planning and retention remain sector-wide challenges.

From a client perspective, private equity has given many the platform upon which to extend the reach and breadth of products and services. Growth is important, of course, but not growth for its own sake – instead, we should seek growth with purpose, built on a clear strategy with long-term conviction.

Of course not all private equity approaches are the same, nor are the outcomes for businesses in which they invest.

Like any form of ownership, outcomes depend on alignment of interests, appropriate governance and an engaged leadership. But where those elements are in place, the results can be transformational.

So, when private equity is spoken about in tones of beware and warnings of what may happen, I would encourage a more balanced view.

Speaking from personal experience, private equity has empowered us to grow faster, invest deeper and think bigger thoughts without compromising on the values and culture that define us.

As the insurance industry continues to evolve, I believe private equity will play an increasingly important role in shaping its future. I am proud to be an advocate for an undeniably imperfect industry.

Much like the insurance industry in fact…