A-Plan deal enables Howden Group to be a ‘real UK broking powerhouse’

Howden Group’s acquisition of personal lines broker A-Plan, announced last September, will enable the business to grow into “a real UK broking powerhouse”, said David Howden, group chief executive of Howden Group.

Speaking exclusively to Insurance Times, Howden explained that the main goal arising from the A-Plan acquisition, expected to complete this month, is to create “the preeminent UK retail business across many specialties that will be the envy of our competition”.

Amid these grandiose ambitions, however, initial talk of the deal came from humble beginnings as Howden originally met A-Plan chief executive Carl Shuker through an advisor to talk shop about long-term investments and give advice on Canadian pension funds.

Once the pair got chatting, however, Howden quizzed Shuker on A-Plan’s success to date and he quickly uncovered similarities between the two businesses, particularly around their ethos, vision and principles.

“When I started talking to Carl, we recognised early on in our conversation that our businesses were very similar, certainly culturally and what we thought was critical in the businesses: about a focus on our people and big employee ownerships in the businesses,” he said.

“There’s just lots of things that rang true with me and I think struck a chord with Carl as well.”

This realisation led Howden to bring the conversation around to a potential acquisition.

He continued: “I remember saying to Carl, ‘if you want a really long-term investor, there’s absolutely no-one who’s longer term than Howden Group’. He smiled and said ‘let’s carry on talking’ and off we went.”

UK focus

Although Howden Group is undoubtedly an international business – it operates in around 40 countries – Howden said: “I don’t think people recognise our presence in the UK market.”

He continued: “Ultimately, we’re very much an international business. Nonetheless, we are also very heavily a UK business and we are UK headquartered and we pay UK taxes.

”We’re proud to be a UK headquartered business, but with a very, very cultural and diverse and broadly spread, interesting mix of businesses around the world and people in the business.

“Despite our success and our growth, I don’t think people recognise our presence in the UK market. They did in the London market and, therefore, what A-Plan brings is our ability to be a real UK broking powerhouse.”

The combined businesses certainly bring strength in numbers on home turf with an estimated 5,000 staff in the UK and more than 100 offices across the country; A-Plan additionally intends to open more branches this year too.

But, the key advantage of the Howden Group and A-Plan partnership lies in its broad, far-reaching proposition, as both businesses combine their opposing market strengths for collaborative good.

Not only will this drive overall business success, Howden added, but it will also make Howden Group more attractive as a buyer when searching for its next acquisition.

Howden explained: “We clearly were already very strong in the certain areas of specialty and the financial lines, professional risk, in the banks, in the heavy areas, very fast growing and strong employee benefits business. There’s loads of big specialties we have, as well [as] a very dominant London market presence.

“A-Plan has that [speciality] very much in the personal lines and the SME [market]. So, together, we’ve got now a real breadth of diversity, but strength and leverage in the UK marketplace.

“We can now use that platform, use that partnership, use that opportunity and strength, along with all the capital we’ve got in the group, all the technology we’ve got in the group, to really be the partner of choice for other businesses and other talent in the UK market.

“We’ll create together, over the next five, 10 years, absolutely the preeminent UK retail business across many specialties that will be the envy of our competition and that clients will absolutely want to come to, to have [the] right level of services and, importantly, talent will want to come and be able to grow their careers over the long-term with certainty of independence and certainty on being able to focus on what matters, which is servicing their clients.”

Three-way conversation

Another simple conversation with Shuker led Howden Group to secure private equity investment from European business Hg in October last year – Hg has been investing in A-Plan for around five years now, Howden explained, so once a deal with A-Plan was on the table, “it became clear that this might be a three-way conversation”.

“It suddenly became an obvious great idea about not just us partnering with A-Plan and Carl and his team, but Hg maintaining their relationship with A-Plan and extended it by partnering with Howden Group,” Howden added.

For him, “having one or two smaller minority investors who really got our strategy” is a useful backbone for sustainable business growth, alongside Howden Group’s core of employee ownership.

“We’ve always had outside minority investment in the business,” Howden said.

“Ultimately, if you’re going to build a business over the very long-term and believe you can build a sustainable business over five, 10, 15, 25, 50 years – if you’re going to do that, you need to have a capital base that is sustainable.

”You can’t invite short-term capital in that’s going to want to churn and turn the business too fast.

“You can’t probably not have any third party capital because then you run out of capital and what happens is, [which] we so often see in broking businesses, the businesses end up being sold because the owners ultimately want to get some liquidity from what they’ve built up, quite rightly, over the years and the only way of doing that, because they haven’t really planned early enough, is to sell the business. That’s not really a sustainable model.”

Other investors in the business currently include General Atlantic and CDPQ, but Howden added that he won’t be looking for any further investors in the near future. “We don’t need a fourth partner at the moment, definitely not. We’re very happy with the three,” he stated.

Howden sees a hotbed of opportunity arising from the Hg investment, which he described as “our £500m war chest to really expand our M&A activity, both here in the UK and internationally”.

He explained: “The Hg capital will really play to our strengths, attract the talent, do M&As and, importantly, to invest [in] what we have to invest in if we’re going to be relevant in the future and that’s a digital world.

“It’s those businesses that [haven’t] made the right investments in digital and in data and in breaking the technology revolution [that] are not going to be relevant either for the talent they want to employ or the clients they need to service in the future.

“I think 2021 is going to be a very exciting year for us.”