Insurance brokerage Ardonagh leverages M&A for 37% H1 top line gain

UK insurance intermediary  The Ardonagh Group put recent M&A finds to good use, increasing first half revenues by an eye-opening 37% as it continues to push itself into specialty and beyond its UK home market.

But the increasing debt load from Ardonagh’s buying spree did its worst by the bottom line. Following a £104 million increase in financial costs on new debt, the net loss had extended by 171% to £111.9 million.

The top line growth to £595.4 million was fuelled chiefly by acquisitions designed to grow Ardonagh’s specialty and international businesses. Cleared of the impact of those deals and FX moves, management claimed organic growth had accelerated to 7% in H1, still driven by the international and specialty platforms plus advisory.

"Earnings growth has been achieved through a combination of acquisitions and organic growth in all platforms apart from Retail, with income growth and the delivery of cost savings and synergies offsetting some inflationary pressures.

Ardonagh Specialty doubled in size following the 2021 acquisition of Besso Insurance, Ed Broking and Piiq Risk Partners and ongoing producer hires who were said to have delivered “rapid growth to maturity.” Organic growth in specialty came to 12% in constant currency terms.

Ardonagh International grew by 69% fuelled by expansion in Australia, Ireland, Germany and the USA and “rapid delivery of revenue synergy opportunities.” Underlying organic growth came to 10%.

Following the spate of acquisitions and growth, Ardonagh Specialty and International together contributed 44% of group income in the first six months of 2022, compared with 31% the prior year.

Margins across the business are down lightly after the string of acquisitions. Compared to the 37% top line growth, adjusted EBITDA grew at a slower 21% pace to take 4.2 percentage points off of the adjusted EBITDA margin to 31.2%. Management preferred to brag about margin gains against recent twelve-month rolling measures.

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