Insurance Times speaks to the industry on Howden’s most recent purchase, which ‘on paper, looks great for all parties concerned’
Following Howden’s purchase of independent retail broker Aston Lark last month, Howden Group chief executive David Howden has been described by industry commentators as “an extraordinary operator” for plugging the business’ proposition gaps with recent buys and building “a massively successful global broker”.
Howden’s purchase of Aston Lark follows its acquisition of nationwide broker A-Plan – this deal was originally announced back in September 2020 and completed in early 2021.
Upon completion of Aston Lark’s acquisition, the broker will operate alongside A-Plan and Howden UK – the three businesses will provide services across personal lines, commercial lines, schemes and affinity, health and benefits, corporate and specialty.
Aston Lark’s chief executive Peter Blanc will become executive chairman of Howden’s UK retail broking operations, while current A-Plan chief executive Carl Shuker will be appointed chief executive of the new platform.
‘Most successful’ retail broker
Howard Lickens, executive chairman of the Clear Group, said that prior to October’s Aston Lark deal, Howden was “underweight in UK retail”. Therefore, “in just a few months, [David Howden] has put that right by securing A-Plan and Aston Lark, two of the most successful retail brokers around.”
He continued: “What an extraordinary operator David Howden has proved himself to be. In just 27 years, he has built a massively successful global broker.”
Lickens added that “as a competitor to Aston Lark, I would have liked nothing more than a complicated ‘merger of equals’ with one of the other bigger beasts in the forest”.
“A couple of years of disruption would certainly have helped our cause and [would] have removed - or at least distracted - some competition from an overheated market,” he noted.
Speaking more broadly, Lickens said that “institutional money of some kind is essential these days for larger brokers”, however his main concern is that private equity investment “can create an approach which emphasises the short term”.
He added: “It will be fascinating to see if [Howden’s] financial backers can resist this temptation and look towards the longer term - if so, that can only be good for the market and for customers in general.”
In October 2020, Howden received a “significant long-term” equity investment of up to $1bn (£7.3m) from Hg, a leading European investor in software and tech-enabled services businesses. Hg had previously invested in A-Plan too.
Meanwhile Ashwin Mistry, executive chairman of Brokerbility, told Insurance Times that he was “initially surprised to read about the deal so early after Goldman Sachs’ involvement” – the banking organisation acquired Aston Lark in May 2019.
However, “on reflection, it seems the M&A pace continues unabated and on paper it looks great for all parties concerned - especially the 300 plus shareholding staff”, Mistry added.
Insurers react to ‘strong fit’ merger
Insurers are also reportedly pleased to see Aston Lark join the Howden family.
For example, Nick Hobbs, chief distribution and regions officer at Allianz, said Blanc’s business is “undoubtedly a strong fit for Howden alongside the existing retail business and structures”, additionally noting that the merger “markedly adds to Howden’s overall capabilities”.
He continued: “I like the idea of a further sizeable, capable, professional brokerage and ultimately, customers have another - widely capable - choice of broking provider.”
Axa Commercial’s chief executive Jon Walker agreed with Hobbs’ perspective. He told Insurance Times: “The bringing together of Howden, A-Plan and now Aston Lark creates a strong and significant broking business with wide market coverage and an experienced leadership team.
“I look forward to Axa continuing to build on our existing relationship and to jointly develop propositions that are compelling across a range of market segments.”
Meanwhile, Alex Hardy, sales and distribution director at insurer RSA, said “the deal adds to the bow wave of consolidation seen in the market in recent times and sees Howden Broking Group add a significant UK regional strength to [its] recognised specialisms in global business”.
He added: “As we at RSA have strategic relationships with both teams, we only anticipate a positive outlook and we will continue to work with [the] combined teams.
“Creating a culture that will continue to attract the best of breed brokers [must] surely be the aim as [the businesses work] through their integration.”
‘Greater opportunities’ for regional brokers
As Aston Lark moves to join Howden, Mistry explained this could signal an opportunity or a potential direction of travel for other independent brokers.
He said: “I do see even greater opportunities for smaller regional independent brokers [that] can take advantage of their unique position as clients crave [a] bespoke, face-to-face service. As they say, in confusion there is opportunity.”
He added that entrepreneurs’ relief – now known as business asset disposal relief, which can reduce the applicable capital gains tax when selling all or part of a business - and corporation tax relief, such as for research and development, could “act as a catalyst for renewed vigour in the larger deal space”.
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