Ant Middle: M&A will provide Ageas UK with ‘optionality for the future’

In April 2021, Ageas UK – the British arm of Belgium-based insurer Ageas Group – unveiled a new four-year strategy which revealed its ambition to solely deal in intermediated personal lines business.

This vision was the brainchild of the recently promoted Ant Middle, who swapped being managing director of partnerships for the top chief executive job in June 2020, succeeding Andy Watson.

As of May 2024, Middle and his team are on the home straight of this strategic cycle, with only one item on the to-do list left to accomplish this year – implementing a new core insurance platform courtesy of software as a service business EIS.

The new platform will be tested over the summer ahead of officially going live in the second half of 2024.

Alongside this project work, Middle and the rest of the Ageas UK leadership will also be finessing the firm’s next three to five-year strategy, which Middle plans to officially share with the market this autumn.

Speaking exclusively to Insurance Times, Middle confirms: “I don’t expect a massive change in terms of what we want to do as a business [in the next strategic cycle].

“We will want to continue to grow profitably, we will want to continue to commit ourselves to supporting brokers and we will keep investing in the things that are going to make us really successful in this market.”

Despite the insurer’s commitment to “never be complacent” and to “keep working hard, making sure that we keep on doing those fundamentals really well to make sure that we continue to navigate a really tricky market [and] work incredibly hard with our broker partners”, Ageas UK’s strategy update will veer slightly away from its current business as usual approach.

The key difference is Ageas UK’s appetite for M&A, with its parent company now looking to achieve “greater scale in our owned entities across our international portfolio” and “grow our non-life exposure within the group”.

Middle explains: “M&A is something that we now have as an option.

“We’ve got the support of our shareholder. [It is] backing us in terms of deploying capital in the UK – that’s supporting our growth and that also gives us optionality for the future.”

Considering acquisition options

The most obvious signpost of Ageas Group’s intention to spend on acquisitions in the UK is its recent pursual of Direct Line Group (DLG).

It announced a possible £3.1bn bid for the fellow insurer on 28 February 2024, before improving its offer on 13 March 2024.

However, both proposals were rejected by DLG, with the company claiming that these “highly opportunistic” overtures were “uncertain, unattractive” and “significantly [undervalued] DLG and its future prospects”.

Although Middle emphasises that improving organic growth will form “the heartland” of Ageas UK’s next strategy plan, he adds that M&A is also “an option that we now have to consider as we think about the future development of the business”.

He continues: “The group were very clear historically that our task was to make sure that the UK business was in good health – that’s what we’ve been focused on for the last three or four years.

“Given what happened [with DLG], it’s clear to the world that we now have the option to think about acquisitions if they make strategic sense for the group and the UK business, so we will think about it, we’ll evaluate them hard.

“If there are opportunities for us to do something in terms of an acquisition, then that’s an option we’ve now got to think about.

“M&A is an option for the UK business. It won’t be at the heart of our strategy, but it’ll be something that we’ve got in our in our kitbag to think about.”

Middle notes that when looking at potential acquisitions, scale and available capabilities are both important.

“Personal lines clearly is going to be the focus and part of the strategic thinking that we are doing right now is what sort of capabilities we want to add,” he explains.

“Scale is really important – and that’s not scale for vanity’s sake. Scale is just really important in the personal lines arena. So, achieving scale is important, but not scale at any cost. It needs to add value to our business and we are thinking right now about the capabilities that we would like to add and if opportunities arise, what acquisition targets should and could look like.”

Driving organic growth

However, for Middle, driving organic growth is “an absolute fundamental focus” for Ageas UK and is his preferred method for achieving that much sought-after scale.

Ageas Group’s 2023 year-end financial results, published in February 2024, indicate that Middle’s attention to detail around organic growth is reaping dividends. For example, Ageas UK grew by 47% in 2023 and was a “very positive contributor” to the group’s 95% combined operating ratio.

In the last 18 months, Ageas UK has also attracted a further one million customers, taking its total UK customer count to 4.5 million.

“We are now growing in a really healthy way,” Middle says. “We’re pleased with the profitability of the business – we think we’ve got that into really good shape.

“We are beginning to achieve the kind of scale and presence that backs the ambition that we have.”

Middle’s tactics for driving organic growth include continuing “to invest in our technical insurance capabilities” and “the software that we’re deploying”, as well as developing “fantastic front end capabilities” – such as extending the real-time pricing model the insurer launched for motor policies last January into its home insurance products. This went live in February 2024.

He additionally plans to “continue to invest in the boring infrastructure to make sure our data quality is fantastic to power the business”. Maintaining data quality is “a forever task”, Middle notes.

Investing in artificial intelligence (AI) and generative AI is also “so important to be able to work brilliantly with third parties”.

Middle explains that Ageas UK is already deploying generative AI, with the technology currently being tested in its claims function, to streamline claims summaries, for example. This pilot started in April 2024.

As well as looking at internal efficiencies and skills, Middle adds that Ageas UK also plans to extend its “breadth of our distribution” to aid organic growth.

“There’s loads more opportunity for us to work with other intermediaries that we don’t work with today, in new and interesting areas,” he says.

Product portfolio

A further lever Middle hopes to pull to achieve greater organic growth is “broadening our product range, both extending what we do within home and motor and maybe adding more products to our portfolio as well”.

At this early stage of strategy development, Ageas UK is “really open minded” about potential changes to its product set.

Middle explains: “We’re thinking about a range of embedded products very close to our existing portfolios, particularly in motor insurance.

“There [are] new routes to distribution – if [we] think about how motor manufacturers are developing their propositions, how we modernise and make sure our products are delivered to customers in the way that they want products to be delivered to them, not only bought in isolation, but bought as part of a service package more broadly. We’re thinking hard about that.

“We’re also thinking about other big personal lines products. So, should we think about travel insurance? Should we think about pet insurance? Those are things that we are at the very, very early stages of evaluating.”

For Middle, his first four years at the helm implementing his strategic vision has been hugely positive – he describes Ageas UK’s clear focus on personal lines as a big business “benefit” that has “stood us in great stead” when it comes to growth.

“[I am] really pleased with the progress we’ve made,” Middle says. “[Ageas UK is now] thinking about the future, but [is] never complacent.

“We have to keep doing what we’re doing [and] keep getting the fundamentals right so that we continue to have optionality for the future.”