Hyperion, the privately owned insurance broker, is to buy rival a-plan in a 700m deal that will catapult it to number three in the uk market.
The deal, which is the latest in a rapidly consolidating industry, will create a company that manages 4bn of insurance premiums a year with brands including endsleigh, a-plan, howden and rkh.
David howden, hyperions chief executive, said the combined group, with 1bn of annual revenues, would be in better position to cope with growing rivals. it creates one of the uks largest brokers, he said. it positions us as a proper challenger broker to the big americans.
The top three in the industry mmc, aon and willis towers watson will become two early next year when aon completes its acquisition of willis towers watson. mmc bolstered its own position in 2019 with the acquisition of london-listed jlt.
Hyperion and a-plan act as intermediaries between insurance companies and their end clients, making money by helping companies and individuals to arrange their insurance coverage.
Hyperion, whose employees own just under half of the business, said the acquisition of a-plan would put it just behind mmc and aon/willis.
What a-plan brings to us is real scale in the uk market, said mr howden, who added that the deal would bring opportunities to cross-sell a-plans individual insurance to hyperions client base of larger organisations. theres huge synergies in the businesses coming together.
Financed with a mix of cash and debt, the purchase will bring with it a-plans network of 100 branches across the uk. carl shuker, a-plans chief executive, said it would remain committed to its bricks and mortar branches despite the twin challenges of declining high streets and coronavirus restrictions.
We operate very differently to price comparison sites and call centres by offering advice and local service, he said. online it is very hard to get advice. you have to work it out for yourself. we build relationships with our clients in the traditional way.
Mr shuker said a-plan, which was founded in 1963 and has been majority owned by private equity company hg capital since 2014, had organic revenue growth rate of 8 per cent to 9 per cent a year. the company bought student insurance specialist endsleigh from zurich in 2018. hg paid 250m for its 73 per cent stake, and will receive about 500m from the sale to hyperion.
Hyperions rivals have also been bulking up lately. arthur j gallagher bought specialist insurance broker stackhouse poland last year, while ardonagh has made a string of acquisitions and recently completed a refinancing that has left it with a 300m war chest for more deals.