The firm has also earmarked £300m for future M&A activity
Global insurance group Hyperion, which owns retail broker Howden and specialty business RKH, has reported organic growth of 11% for the year ending 30 September 2019.
Breaking this down further, David Howden, chief executive at Hyperion, told Insurance Times that high organic growth is a group-wide phenomenon.
For example, broker Howden recorded organic growth of 9% for the period, while RKH charted 14% organic growth overall – its specialty arm reported 15% organic growth compared to 13% for reinsurance. Hyperion’s managing general agent (MGA) and underwriting operation, Dual, had 12% organic growth up to September 2019.
Howden attributed the firm’s positive organic growth rates to empowering staff, having specialist products and operating a strong distribution model.
“First of all it’s talent. Second, it’s get the right product, get the experts in there but really be focused, be a specialist. And then I think the third thing that’s driving the very strong organic growth is the distribution of our business. We’ve built a massive distribution business from both the broking and underwriting side.”
Group wide figures
Hyperion reported revenue of £725m for its year-end results; this is a 17% increase on last year’s figures, pro forma for the effects of acquisitions.
The organisation also saw a 16% increase in its adjusted consolidated earnings before interest, tax, depreciation and amortisation (EBITDA), which reached £211m, while its EBITDA margin sat at 29%. Hyperion as a group handles $7bn of premium on behalf of its clients.
Dual, which works with 6,500 brokers, wrote $1bn of gross written premium (GWP) for 2019 – 40% of this is written in the UK market. Howden added that the business, therefore, launched three new teams last year in the UK around terrorism, healthcare and European property.
The business also grew its cyber GWP by 60% in 2019.
Revenue divided between the group’s operating locations showed that the UK produced 18% of the firm’s revenue, compared to Europe (26%), North America (22%), Latin America (6%), Asia Pacific (19%) and Turkey, the Middle East and Africa (9%).
Moving forward, Howden highlights that Hyperion will be focusing on building its specialty products globally, developing local client services and continuing to be a sustainable business. “How we can develop products, adapt products and in our little way, make sure the world is actually sustainable and one that we continue to thrive in,” he added.
Acquisitions
Last year, Hyperion purchased two Asian businesses, in Thailand and Malaysia, in order to build its scale in this continent. The organistion also acquired three employee benefits companies, to strengthen its product base – employee benefits related work now equates to 30% of the group’s revenue, compared to less than 4% five years ago.
Hyperion spent £100m upfront on its acquisitions last year, with earnout on some of them – this refers to when a seller will gain additional compensation in the future if the business achieves certain financial goals.
Mark Craig, group chief financial officer at Hyperion, stated that the business has also set aside funds for future merger and acquisition (M&A) activity.
He said: “We have 300m as at the end of the year of cash and facilities to invest in further M&A or growth initiatives for the group. We start 2020 with a very strong balance sheet, which is a good place to be.
“We’ve got a healthy list of potential acquisitions and generally, they’re companies that we know well and have worked with previously. It’s relatively rare to go out and buy something where we have no previous interaction.”
Attraction, not poaching
When Insurance Times asked Howden about the poaching accusations from broker Marsh last summer, alleging that Hyperion coordinated the resignation of 47 employees, Howden described it as “an interesting choice of words”.
He continued: “We’ve always been a magnet for talent. Our job is to set our store out and attract talented people to the business long-term. If you look at our staff numbers five years ago, we had 1,800 staff. Today, we’ve got over 5,000. Five years ago, we had 300 shareholders in our business. Today, we’ve got over 800 shareholders.
“That attraction of talent, not the poaching of talent, is a core business strategy.”
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