Back in October I quoted the Financial Times: 

" Deal activity among smaller companies has continued apace, with broking groups such as Howden and Ardonagh hoping to beef up their challenge to the largest operators. Private equity investors have poured capital into these challenger brokers in recent years, with Hg taking a stake in Howden last year. That deal boosted Howden’s capacity to make further acquisitions and valued the group at about $5bn including debt."

And today the FT writes: "Institutional investors including the Abu Dhabi Investment Authority have backed UK insurance broking group Ardonagh in a new round of fundraising that values the company at $7.5bn."

Formed six years ago in a merger that brought together troubled broker Towergate with four other intermediaries, Ardonagh has built itself up through acquisitions to become one of the UK’s biggest privately owned insurance intermediaries, with brands including high street broker Swinton and motorcycle insurance specialist Carole Nash. A top-20 broker globally, in revenue terms, it made its first US acquisition earlier this year.

 “Part of the reason businesses went public [in the past] was because you reached a certain size where there just wasn’t enough capital out there to keep you going as a private enterprise. That is definitely not the case any more. For businesses that have a real vision and a drive, there is capital out there to take you to any size.”

Ardonagh Chief David Ross

VC capital has driven large investments in insurtechs- both technology partners and full-stack insurers. Howden and Ardonagh show that here is equal attraction to invest in global brokers and both these companies themselves are investing in and deploying innovative and scalable technologies.

ust as private equity investors have poured capital into these challenger brokers in recent years, investors are also eying the low valuations and big cash piles at UK and European groups opening the doors to agitating shareholders 

The slow-moving beasts of the insurance sector are being targeted by activist investors betting that a pandemic knock to valuations and years of overexpansion have made them vulnerable.

“Nobody pushes us harder than we do,” Aviva chief executive Amanda Blanc told the FT last month. “We will constantly be pushing for the organisation to continue to improve, we know it has underperformed in the past, we recognise that and we want to make the performance better,” she added. “We didn’t need Cevian to tell us that RSA had an expense issue and had to therefore improve its productivity,” said Scott Egan, chief executive at RSA’s UK and international business, who has been at the group since 2015, shortly after the activist joined the shareholder register. While productivity goals can be obvious, reaching them is the important bit, he said. “The world is littered with good PowerPoint decks, but the execution is what differentiates.”

Two key insights from ITC 2021 by Celent Senior Analyst Jim Manzini 

are worth pondering over.

• Distribution innovationare in the driver’s seat when it comes to distribution innovation, and carriers are becoming more adept at integrating with them.

  : Digital agents and brokers , as well as platforms, exchanges, etc., 

• Executing on innovation

  : Carriers are realizing the key to insuretech innovation is to change the way they innovate: digital product-led, human-centered design; long-term vision but small, incremental experiments; and modern architectures that support rapid development.

Technology partners will be key players to help brokers and carriers collaborate and compete. Howden is energetically executing strategic plans and investing in these areas.

No time to rest on laurels is there?