Arch Insurance Europe has agreed to acquire Ardonagh’s UK commercial MGA businesses.
The asset-only deal will see Arch take over the renewal rights for the Arista, Fusion, Towergate Personal Accident and Travel, and Towergate Commercial MGA brands from 1 January 2019, which collectively generated more than £150mn of gross written premiums in 2017.
Under the terms of the transaction, Arch will pay Ardonagh a consideration of up to £31mn for the commercial lines segments of its MGA Geo Underwriting, which is conditional upon performance criteria.
Around 250 employees from these businesses and nine associated offices will transfer from Ardonagh to Arch as part of the deal.
Proceeds of the sale will be used for further investment in the group, whilst confirming that Geo Underwriting’s personal lines, private clients, specialty and agriculture brands AIUA and BIBU remain as part of the group.
Arch said the deal will give it “a meaningful presence and an extended office network” across the UK that will complement its existing London Market business that is focused on wholesale distribution and delegated authority business.
It added that the acquisition forms part of its strategy to grow its regional UK presence, with minimal overlap with the existing Arch business written in the UK.
Matt Shulman, Arch Insurance Europe president and CEO, said:“We have a clearly stated strategy to build out our distribution capabilities across the UK and Europe and the acquisition of Geo’s commercial lines business represents an important step in this process, building upon the success of the earlier acquisition of Axiom Underwriting.”
He added: “By expanding our regional presence with the addition of nine offices we immediately gain scale and presence in our target markets and we can deliver a broader range of specialist insurance solutions through a network of over 2,000 brokers,
“We are gaining a well-respected and highly experienced team of underwriting and distribution professionals who are perfectly placed to help us build a significant and sustainable business that can meet the growing needs of its clients.”
Meanwhile, Ardonagh CEO David Ross remarked: “Almost 18 months after the creation of the Group, we now find ourselves looking across our portfolio and assessing where we can drive organic growth from leading positions.
“For us, an MGA is most effective in niche and specialist areas. While we’ve undertaken strategic remediation actions within our commercial MGA lines over the past two years and worked with carriers to improve loss ratios, these books now fall outside that strategy and we believe are best placed to succeed within an insurance company. Arch therefore provides the perfect platform from which to drive these businesses forward.”