Derek Coles: UGL Insurance’s chief executive talks ‘recalibrating’ after completing ‘three years in one’

Derek Coles is certainly no stranger to the upper echelons of insurance organisations, with over 30 years of experience across underwriting, MGAs and service providers. 

He spent time as chief executive at Direct Group, before joining Ardonagh in the mid 2010s to become chief executive of its MGA Geo Underwriting, as well as chief executive of Uris Group.

So when it was announced in October 2024 that Coles had spearheaded a management buyout (MBO) of then Ardonagh-owned Uris Group and selected assets from Belfast-based MGA Midas Underwriting, there was an expectation that the newly independent business – now known as UGL Insurance – would make a success of itself.

And now, over a year on from launch, Coles tells Insurance Times that there is a need for some ”recalibrating” following a better than expected anniversary.

He says: “Around £150m of GWP passes through our hands and we have 120 people across three sites. We’ve had phenomenal industry support from the carrier market and 97% of our brokers converted – signing new tobas (terms of business agreements) to come with us out of Ardonagh.

”Based on the plan I and the other founders put forward based on where we would be, we have exceeded expectations/ We are where we anticipated we’d be in year three in year one. We’ve completed three years in one in terms of growth, so now there’s a question of what our plan is now and a need for some recalibrating.” 

Platform play

As Coles admits, UGL can be “a little complicated” and “harder to understand” as a business, but it is best described as “an insurance platform”. 

He explains: “We’re not a claims handler, but we are. We’re not a TPA (third party-administrator), but we are. We’re not an MGA, but we are. We’re like a chameleon, or a leopard that can change its spots – we can be different things to different markets and that’s what gives our business flexibility.” 

This flexibility means that the range of different partners UGL can work with is almost unlimited. Whether it’s “brokers, corporates, affinities, insurers, or anybody – be that a utility firm, retailer or financial services organisations – that has an insurance footprint”, UGL can work with them to construct a programme around an insurance proposition. 

The firm works across many lines too, with presence in home and motor all the way through to niche business, which is where UGL primarily plays. It is also fully FCA regulated, a Lloyd’s coverholder and boasts MGA capability, allowing it provide a full suite of services. 

Particularly in the affinities space, where UGL may work with firms that don’t have their own insurance expertise, the firm also functions as a product co-manufacturer, with input into product design.

In niche business, Coles has seen success in “products that are designed and made for that sector, where we source the underwriting, provide the quote and buy system, put all the administration together, manage the insurer relationship and the bordereaux at the back end, manage the claims, manage the regulatory duties and any complains arising and really put a full service together”.

However, as he explains, the firm is happy to function as a pick’n’mix style service provider, providing whichever services a partner may need while allowing them to handle the parts they want to – with insurers often keeping hold of underwriting and claims management, for example. 

Stars aligning

This type of insurance platform business, which allows for the distribution of niche products, is something that Coles believes the market increasingly has need of, based on market conditions such as increasing consolidation and some players pulling back from lines that don’t generate enough profit to justify cost to serve.

Coles explains: “One of the things that still gets me up in the mornings is that there are so many fascinating conundrums in insurance – lots to solve and loads of markets to serve. Because of increasing consolidation a lot of players have reversed or lifted themselves out of certain lines, but we can provide those services. It’s not a cost play, but clearly it is value play and, from my perspective, there’s a value in serving those markets. And that’s why the smart money is backing the MGA model at the moment.

“People are recognising the significance of this model in the insurance kit bag and, therefore, we’ve come to market in an amazingly fortunate time – all the stars seem to be aligning.”

This model is almost designed to fill in the gaps left in the market by consolidation plays, with smaller, more nimble MGA-type businesses able to hoover up business that larger firms have decided doesn’t fit into a cost ratio.

Coles adds: “Lots of businesses are examining their costs base at this time and are getting too big to react to every opportunity. That’s where my business comes in – we’re very happy to get involved in three, five or seven million of premium-type schemes, whereas for some, they can’t write less than £10m because they can’t really get the machine to spin up for that. We’ve got the underwriting with the administration and the claims handling, so we have the full value chain.” 

“As an independent we can work with the market to handle run off, for example. So if someone’s got a book that is no longer important to them worth £2m and someone’s go another that is £3m and so on, by the time we’ve added everything up then there’s £20m of premium across everything. There might not be enough there scale-wise for the bigger players, but if I put it all together then I can make it work for everyone.”  

And these market conditions are not the only serendipitous aspect of UGL’s journey so far. MBOs can be often be difficult or awkward times for teams, but Coles says that the idea had been floated 18 months prior to its inception, with David Ross, chief executive at Ardonagh, and the rest of the broker’s leadership being “tremendously supportive”.

Once Ardonagh sold its retail business, Atlanta, to Markerstudy in September 2023, the opportunity presented itself for Coles to lead the MBO and go independent. Coles, for his part, remains part of the Ardonagh Charity Trust and speaks warmly about his time within the broker.

Future growth

UGL blowing past its projections for growth in its first year is a positive, but does require some planning. Coles, however, is not keen to set specific targets on numbers of new areas to break into – owing partly to the nature of UGL itself. 

“If you lose that excitement, that adrenaline rush like you get before a big game, then you’re never going to be as good as you think you are.”

He explains: “Making sure we remain nimble as we grow is something we will tackle as we evolve, but we do have to keep that secret sauce that makes us different – we are a unique vehicle in that sense of the word.

”Because of that, 12 months on from launch, it’s almost too early to say where our biggest successes are going to be – whether that’ll be supporting insurers or brokers directly, for example. 

“At the moment, we’re able to provide a plethora of different services to different companies and some of those are going to be better growth opportunities than others, while some are going to be better margin opportunities than others. That’s probably the secret of our chameleon-type skin – it allows to change shape into what’s required at the time.

“So much of what I hear in our own backyard is ’we’re going to the biggest, we’re going to be the greatest’ or ’we’re going to be x billion by this year’. I don’t like that really – we’re just going to grow.

”We can carry on growing organically at quite a rate of knots because we’re fairly new and have still got an awful lot of road to run at without reinventing the wheel, but also economic circumstances are playing into a platform opportunity if you look to the extent of continued insurer consolidation.” 

More long term, however, an independent business owned by management will require more capital to continue growing as quickly as it currently is. 

Coles says: “I’m 12 months out of the corporate environment and have no desire to get back into it, per se, in terms of answering to private equity or investors. But, what I do know is that, at some point as we go forward, a strageic investor is going to be an important component for us to continue our growth. Someone that’s going to bring something that isn’t just money, or someone looking to enter the UK market via a ready made platform.” 

Most importantly, however, Coles says that continued success as an independent also depends on a certain type of personal attitude to solving problems.

He finishes: ”Some people ask why I still want to work and I tell them that I enjoy it – and that there’s only so many games of golf you can play a week. If you lose that excitement, that adrenaline rush like you get before a big game, then you’re never going to be as good as you think you are. That’s what keeps me going.”