Howden Group Holdings Ltd. is setting its sights on competing with the world's biggest reinsurance brokers with its pending acquisition of TigerRisk Partners LLC.
Once the deal closes, which is expected to take place in the first quarter of 2023, the combined entity would be a "clear fourth" in revenue terms, Howden Re CEO Bradley Maltese said in an interview at the Rendez-Vous de Septembre conference in Monte Carlo.
"Now is a great time for the competition, for number four, to start climbing up that scale and looking at those three as a target," Maltese said. "Targeting their people, targeting their revenue, targeting their clients."
Putting Howden's existing reinsurance brokerage together with TigerRisk would create a business with reinsurance revenues approaching $400 million, Howden said when it announced the deal June 9.
Aon PLC 's reinsurance business had revenues of $2.00 billion in 2021, while Marsh & McLennan Cos. Inc.'s reinsurance broker, Guy Carpenter, reported 2021 revenues of $1.87 billion. Arthur J. Gallagher & Co. said Willis Towers Watson PLC's treaty reinsurance brokerage, which it acquired in 2021, had adjusted pro forma revenues of $745 million in 2020 when it announced the deal.
The Howden chief said it was important for the reinsurance brokerage industry to have more competition and a "good number four" to take on the three largest brokers, which control more than 90% of the market.
"Clients are crying out for more choice," Maltese said.
While the deal between Howden and TigerRisk combination may create the fourth-largest reinsurance broker by revenue, the companies expect certain elements of the tie-up to be market-leading. On Sept. 6, the pair announced a plan to form a reinsurance managing general agency and program business unit called SabRE that will place $6 billion of gross written premium. If that plan comes to fruition, SabRE would be the largest business of its kind globally, the companies said.
Well-matched suitors
Maltese said integration of the businesses should be straightforward because the businesses are very complementary. For example, Howden Re has a facultative reinsurance capability that TigerRisk lacks. TigerRisk has a large U.S. presence, while Howden Re is more focused internationally. The two sides of the deal have "almost no overlap," TigerRisk CEO Rob Bredahl said in another interview at the Monte Carlo conference.
"We'll get a big boost from just selling each other's products to existing clients," Bredahl added.
The global nature of the combined entity is set to spur TigerRisk's development plans, according to Tim Ronda, the broker's president. The combination may accelerate investment into its presence in Europe, the U.K. specialty market and areas where it does not have a presence, Ronda said.
"We think that our global package now is going to be a more appealing skillset, and we are going to have to speed up a little bit some of our efforts with some particular clients," he said.