Howden Tiger: a broker born of ‘love’ with the power to disrupt
Howden Group’s acquisition of TigerRisk Partners, revealed yesterday on Intelligent Insurer, represents a natural step for both companies – but the sentiment behind it exudes a remarkable sense of energy and purpose thanks to the zeal and passion of its architects, who also seem to consider each other soul mates.
Rod Fox (pictured, right) and David Howden (pictured, right) are two of the biggest characters in the reinsurance world – never mind just reinsurance brokerage. Both colourful and driven, each has achieved that increasingly rare feat in the ever more regulated world of risk-transfer – of creating privately-owned businesses of scale built on the principles of entrepreneurialism.
Post deal, having unveiled ‘ Howden Tiger’, speaking with Intelligent Insurer, they both seem delighted. In a market increasingly dominated by few big players, the numbers and potential for growth partly explain this. They truly believe that the combined business can disrupt the monopoly in the market and offer clients greater choice. “Clients have been asking for this; I have never seen such an outpouring of positivity and love, since they first got wind of this [they claim talks were leaked in mid-May],” said Fox.
The word ‘love’ cropped up often, in a post-deal interview with Intelligent Insurer. Still high on the energy of signing the deal, which creates a $30 billion company (in gross written premiums handled), Fox and Howden were also keen to stress how positive the dynamic between them is. “Rod and I were made for each other,” Howden said at one point.
In a surreal twist of fate, the seed of the idea for the deal was first conceived at Cliveden House, a stately home in Berkshire, England, where the Profumo Affair, one of the greatest scandals in British politics, was played out. Fox and Howden met there in 2018, around the time of the wedding of Prince Harry and Meghan Markle.
“We had lunch, we discussed the idea, in very broad terms,” Fox said. “It was a very high level, conceptual discussion. But we realised we got on very well. We realised the cultures of the businesses were very similar. We stayed in touch. But this was before the JLT-Marsh deal and some of the other consolidation we have seen.”
Fast-forward to 2022 and those sparks of a potential connection were reignited in the autumn of 2021. By now, the reinsurance brokerage landscape had changed again. Both parties felt the time was right to move things forward – and, they claim, clients were asking for such a partnership. Their key objective was also to retain the entrepreneurial spirit underpinning both businesses.
“This creates a true business of scale with great credibility capable of disrupting the landscape and presenting a genuine challenge to the biggest players,” said Howden. “Yet it is also built on true entrepreneurial businesses. Both businesses were once start-ups and we will retain those principles.”
In terms of the practicalities of the deal, Howden has acquired 100% of TigerRisk for cash; Flexpoint, the latter’s private equity backer, has exited; Fox and other shareholders have taken a mixture of cash and shares in Howden. Asked what his stake in Howden is now, Fox replied: “A lot less than David’s!” He added that Flexpoint was genuinely “sad” to exit. “They loved the people, the industry, the power of the combination” he said.
The business will boast an enterprise value of more than $13 billion, handle some $12.5 billion in reinsurance premiums and have revenues of $400 million, which represents around 20% of Howden’s total revenues of some $2.2 billion. It could be tough to retain such principles in such a big enterprise but, according to the deal’s architects, doing the deal was smooth, or “painless” as they repeated, setting the business up for a path of rapid growth.
One illustration of this was their claim that the name, Howden Tiger, or the order of those words, to be precise, was never debated. “There was almost no discussion. It was suggested, it seemed natural give the Howden brand, and we said ‘yes’,” said Fox. Howden added: “The whole deal was very painless.”
While shy on revealing any growth targets, Fox points out that TigerRisk was already growing by 25% a year. Howden says his company was doing the same – just in terms of organic growth. “Yes, we are competing against the biggest brands, the equivalent of Coke and Pepsi, but we foresee explosive growth ahead,” said Fox.
He continues: “We have had so many calls, since the deal was leaked, from both clients and executives interested in opportunities here. Normally in such circumstances, people go quiet. But I really feel that in this current landscape, clients are crying out for an alternative, for a change. There is a lot of dislocation in the market, and we can offer a credible alternative now.”
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