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David Howden: TigerRisk deal will 'massively accelerate' reinsurance growth

Amid the upheaval in the broking sector and the hard market now was the right time to strike the $1.6bn deal with TigerRisk Partners and become the fourth-largest reinsurance broker, Howden Group chief executive tells Insurance Day

Howden Group chief executive, David Howden, has said now was the right time to strike a deal with TigerRisk Partners after the idea for a tie-up was first seeded a number of years ago.

Speaking to Insurance Day, Howden said the transaction, unveiled on June 9, will “massively accelerate” the combined businesses’ growth in the reinsurance market and provide “a really credible alternative” in the broking sector.

He said he first started talking to Tiger Risk co-founder Rod Fox around four years ago during a lunch at Cliveden House hotel in Berkshire.

“That got us understanding what we were both trying to achieve – there was a connection there. He was a proper entrepreneur building a reinsurance broker against all odds,” he said. But it was not the right time for a deal, he added.

It was around nine months ago that conversations about an acquisition became serious. “We always knew there was a very strong strategic fit. We knew Tiger had a culture that was entrepreneurial. What became very clear was that now was the right time,” Howden said.

Not only had the market seen a lot of consolidation and upheaval with Marsh’s acquisition of JLT, Aon’s failed merger with WTW and Gallagher’s acquisition of Willis Re, but there were also significant structural challenges to deal with.

“It was the hardest reinsurance market we had seen for many, many years,” Howden said. Together, these factors meant there was “a need for a credible, alternative [reinsurance broker] of scale”, he continued. “We thought: if we are going to do it, now is the right time.”

Howden Group’s acquisition of TigerRisk Partners, reportedly for $1.6bn, will create an intermediary business controlling premiums of $30bn and employing 12,000 people.

Significantly, the transaction will form a combined reinsurance broking and advisory business with revenues of $400m – around 60% of which relates to Tiger­Risk. This will make Howden the fourth-largest reinsurance broker behind Guy Carpenter, Aon and Gallagher Re.

Howden’s reinsurance broking business will be merged with TigerRisk’s broking and capital market’s operations under a new Howden Tiger brand.

Already both businesses are growing in the “mid-20s” organically, but Howden said the combination will “massively accelerate” that, combining Howden’s global distribution and managing general agency (MGA) expertise with TigerRisk’s US-focused reinsurance, capital markets and data analytics capabilities.

This will create growth opportunities that would not have happened for the businesses individually, such as hiring talent or client opportunities, such as around international treaty business, Howden said.

“There are people who want a really credible alternative to what has been a triumvirate for a while now,” he said. “Maybe they wouldn’t have joined Tiger by itself, maybe they wouldn’t have joined Howden by itself, but Howden Tiger – that is really interesting.”

He continued: “Our growth story is going to be attractive to new clients. We haven’t had the ability as Howden to have proper conversations around treaty with our international clients. We have expertise in the London market and we have Tiger in the US.”

Howden also expects to see significant growth in the MGA/MGU sector. Howden Tiger will have a substantial book of business in the sector, amounting to around $120m of the $400m combined reinsurance revenues.

“We are leaders in that sector. It is the fastest-growing sector of the insurance market – $60bn in the US already. That is an area we will see a lot of growth coming from,” Howden said.

Capital markets will also be another area for growth. “Who else has a world-class capital markets business sitting inside an insurance/reinsurance broker? We see a huge opportunity there.”

Howden concluded: “We can create for the first time a very strong, focused business across all those areas. We are really in a unique position to deliver something interesting.

“If insurance is going to be part of the energy transition and be relevant to our clients, we need to have the ability to bring capital into the market and line it up with MGAs with good ideas.

“I see us very much ensuring reinsurance and insurance is relevant to our clients in the future,” Howden added.

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