Howden won’t slow M&A in 2023 growth to fill out coverage map

Howden Group won’t let up the pedal on its M&A drive as it seeks growth in 2023, confident that its high-productivity acquisitions are its key to rolling organic growth.

“Absolutely,” group CEO David Howden told Intelligent Insurer when asked if M&A would drive growth in 2023. “Our whole ethos is attracting talent, be it individuals or businesses.”

Growth at Howden is geographic reach first, with a focus on core markets of the UK and continental Europe, plus the forays into underwriting and reinsurance in the US.

“We anticipate having a good year in M&A,” CFO Mark Craig said. “We are doing a lot of tuck-in, 31 last year and I’d be surprised if we didn’t do at least 31 this year to extend our European footprint.”

Depth of offer beats breadth of offer in growth and Howden chiefly talks up existing specialties. Asked if growth meant filling out the Howden profile, the CEO rather talked up opportunities in existing strengths. Reinsurance broking, facultative and capital markets capacity took top billing.

“Our strategy is to build geographic reach and then to deploy our specialty,” Howden said.

The Howden blueprint is to springboard tomorrow’s organic growth from today’s M&A, not just aggregate talent for the production they have. “We only really do M&A for entrepreneurial businesses,” Howden said.

For the firms taken on over the prior 24 months, Howden took £130 million in revenue in 2022 and can increase that number to £200 million for 2023, the CEO said. Some £400 million in the 2022 revenue boost came on the latest round of acquisitions.

Growth M&A in 2022 was done without increasing leverage, either as tuck-ins took equity or existing major equity investors stepped up to enable the larger acquisitions, most notably ponying up £300 million for Aston Lark and £750 million to grease the TigerRisk deal. The resulting organic growth pushes EBITDA earnings at a pace to hold leverage readings in check, Craig said.

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