Azur acquisition set to make Aviva a one-stop-shop for its SME customers

Aviva’s acquisition of MGA Azur Underwriting’s UK and Ireland high net worth (HNW) business in August 2022 means that the insurer now has “all the skills and capabilities” to “be really critical” in this market, according to Adam Winslow, UK and Ireland general insurance chief executive at Aviva.

Within Aviva’s 2022 half-year financial results report, published on 10 August 2022, the insurer emphasised that it was keen to complete more “bolt-on” M&A activity, paid for with surplus capital.

For Winslow, this strategy means targeting businesses that provide cover “where we don’t have a proposition, or we don’t have skills and capabilities”.

“That’s how we think about a [bolt-on acquisition] - it’s to solve something we don’t otherwise have,” he explained.

“If there’s a way that we can bring skills and capabilities, bring teams in, acquire size and scale so that we do have strong, market leadership positions in our home market, that ultimately is what we’re looking to do.”

Achieving a ‘number one position’ in HNW

Most recently, Aviva’s appetite for bolt-on purchases has centred around its private clients and HNW business – this started with its purchase of Axa XL’s private client book back in March 2021, followed by the Azur Underwriting deal this year.

These businesses will operate alongside Aviva’s mid net worth proposition, Distinct, to provide a more rounded and substantial private client offering, Winslow noted.

However, a key driver behind Aviva’s private client focus is, in fact, its pool of commercial lines SME business owner customers.

Winslow explained that the majority of this demographic are also HNW individuals, so it was simply “wrong” to provide insurance for their businesses without also having a proposition for their personal lives.

He told Insurance Times: “The owners of those SME businesses tend to be high net worth individuals. So, it was wrong in many respects that we could cover their businesses, but we couldn’t cover them individually - that’s what I mean about a gap that we were looking [to rectify with bolt-on M&A].

“We knew the brokers, we knew the companies and we knew the individuals, but we didn’t have a proposition that matched the needs of that particular customer cohort.

“By acquiring Axa XL and now acquiring Azur, we now have all the skills and capabilities – [including] underwriting, claims, pricing - that we didn’t otherwise have to be really critical in this space.

“The combination of those three different bits - Distinct, Axa XL and Azur - should put us into the number one position in that part of the market.”

Organic growth

The UK and Ireland HNW team at Azur will officially join Aviva at the end of the year following a Transfer of Undertakings (Protection of Employment) (Tupe) process. The HNW business itself will follow suit in early 2023.

Once Azur has been comfortably integrated into Aviva’s private clients division, Winslow said the aim will be to achieve “strong organic growth”, supported by Azur’s digital savvy propositions and know-how.

He explained: “We’ve got all the ingredients [now] that we didn’t otherwise have. Azur [has] a very strong digital background – [it has] a really good mid net worth product called Smart Home.

“So, [Aviva will use Azur’s] technological expertise [as well as add] more resource into our existing teams, [which] will hopefully allow us to write more business.

“There is a lot of business out there to be written and so we’re hopefully positioned well - not just from a broker relationship and broker sentiment [perspective], but [also because of our] access to those end clients, [we can] do a lot more in this space than we’ve ever done [before].”

Although Aviva has committed to look at additional bolt-on transactions, Winslow added “there’s nothing specific” in the M&A pipeline currently that seeks to address potential “gaps in the portfolio”.