In a strategic move, the Ardonagh Group is selling its personal insurance business, Atlanta Group, in a deal valued at £1.2 billion. This sale not only marks a significant shift in the company’s portfolio but also provides CEO David Ross with an £800 million war chest to fuel further acquisitions in the specialized insurance broking sector.
The deal, with UK insurer Markerstudy, is backed by Pollen Street Capital and Bain, with Pollen Street remaining Markerstudy’s majority owner. As part of the arrangement, Ardonagh will also retain a minority equity stake in the combined business, estimated to be worth around £400 million.
This divestiture sees Ardonagh freeing up substantial capital, as Atlanta Group represented a fifth of the company, comprising household insurer Swinton, van specialist Autonet, and motorcycle underwriter Carole Nash.
The move allows Ardonagh to turn its attention toward overseas acquisitions, particularly in Continental Europe, with a focus on Scandinavia, while also strengthening its presence in Australia and Portugal.
Ross emphasized the importance of scale in competing with industry giants like Marsh & McLennan Cos., Aon Plc, and Willis Towers Watson Plc. He stated, “You have to have a scale to go toe-to-toe with the big brokers because if someone is placing a large amount of business with an underwriter they would have much more negotiating power.”
Ardonagh’s strategy for competing with larger rivals involves maintaining its status as a private company to maximize flexibility in responding to evolving circumstances. Ross explained, “Our plan is to build a sustainable model that allows us to stay private for decades.”
Chairman John Tiner stressed the company’s commitment to reporting standards akin to those of a public company but with the agility of a private entity. Ross noted the shifting perception of going public, saying, “Twenty years ago, going public was a reward for being successful. It now looks like an extraordinary punishment.”
Ardonagh, formed in 2017 through the merger of Towergate and four other entities, is majority-owned by HPS Investment Partners and Madison Dearborn Partners. The company operates as an independent insurance broker with four units—international, specialty, advisory, and retail.
With 130 acquisitions since 2017 and approximately $1 billion in annual deal spending, Ardonagh has risen to become one of the world’s 20 largest brokers, reporting $2 billion in pro forma income for the year ending June 30.
Upon completion of the deal, the combined entity of Atlanta Group and Markerstudy will boast nearly 8 million customers and over £3 billion in annual premiums in the home and motor insurance sectors. This expansion will result in the employment of around 7,300 individuals across the UK.
Kevin Spencer, CEO of Markerstudy, expressed excitement about the merger, stating, “A combination with Atlanta has been a long-term ambition of ours. The strong alignment in our models and shared values and ambitions simply could not be ignored.”
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