CEO David Ross says focus will be on integration and international expansion.
Ardonagh Group CEO David Ross has stated that the company’s 11.3% increase in income in 2017 has proved the “commercial viability” of bringing together the different businesses in the group.
In its financial results for the year ended 31 December 2017 the broker posted an income of £535.7m for 2017 (2016: £481.3m). However, it also revealed a £260.9m loss for the year.
Acquisitions
Since the creation of Ardonagh in July 2017 the company has spent £83m on acquisitions including Carole Nash, Mastercover and Healthy Pets. Ross confirmed that this activity was set to continue.
The business is currently looking at £500m worth of deals. This is around 50 different transactions, including books of business as well as whole companies.
According to Ross Ardonagh has learned from past mistakes and will have a strong focus on integrating any future purchases.
“We have a diverse platform to work from, but any business we buy has to be prepared to integrate into our business,” he stated.
“We are deciding on what deals to chase and we will continue to make acquisitions, but only those that fit the rules we have in terms of cultural alignment and integration.”
Ross added: “For every deal we have to do we have to make them better and they have to make us better.
“We’re not buying for the sake of buying and we’ve been very selective in the deals we’ve made.”
International
Ross explained that he wanted Ardonagh to be twice as big in three years’ time and noted that this could only be done through exploring its options outside of the UK.
“All big global brokers have started in the UK or in the US and you can’t conquer the world without a strong footing in either of those markets,” he noted.
“Our business is predominately UK-based, but we have money coming in from internationally as well. We will follow the money and focus on the territories where we’re doing well.”
Structure
According to the CEO, Ardonagh is now also evaluating its operational structure to figure out how the different parts of the group should fit together.
He said: “Janice’s [Deakin, deputy CEO] key priority is looking at the segmented structure we have now and what we can do about it.
“We have one huge distribution business and we need to look at how it stands and operates and how we can break the company up.”
Organic
According to its results 3.5% of its income growth was achieved organically. Ross stated this was “just about acceptable”.
Deakin added that she expected Ardonagh to be “as good as anybody else” at organic growth.
“You only get permission to buy businesses if you can grow organically as well. You can’t do mergers and acquisitions to cover organic shrinking,” she continued.
In May 2017 Insurance Age reported that Towergate was set to migrate its advisory business to the Acturis platform.
Ross noted the move was going to be completed in the second half of 2018, about a year ahead of schedule.
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