The Ardonagh Group, a leading UK insurance broker, announced it has agreed to acquire the insurance operations of BGC Partners Inc. for $500 million in cash.
The transaction is expected to close in the second half of 2021, subject to regulatory approvals.
Ardonagh will acquire 100% of Ed Broking Group and Besso Insurance, which were recently grouped together under the brand of Corant Global. Corant comprises global wholesale and specialty re/insurance broker Ed, Lloyd’s broker Besso, aviation specialist Piiq Risk Partners, German marine broker Junge, UK-based MGA Globe Underwriting, Australian MGA Epsilon Underwriting and European MGA Cooper Gay.
Approximately 900 people currently work across each of these insurance brands, which contributed approximately $191 million in revenue during the 12-month period ending March 31, 2021.
Ardonagh intends to house the former BGC entities within its Ardonagh Specialty segment, which currently comprises Price Forbes, Bishopsgate and Compass London Markets.
Ardonagh said it will fund the purchase via a combination of equity and debt. In 2020, the company announced it had secured a $2 billion loan for acquisitions.
Since then, the company has been busy fulfilling its M&A strategy. In March 2021, an Ardonagh subsidiary, Towergate, announced it had agreed to purchase the corporate retail book of business of AFL Insurance Brokers. In April, the company launched Ardonagh Global Partners (AGP), a unit focused on international mergers and acquisitions. At the same time, it announced it had acquired Chicago-based AccuRisk Solutions, which specializes in medical stop loss, occupational accident and supplemental health products for small and mid-sized businesses. Other strategic purchases this year have been made in the UK and Australia.
Commenting on the BGC acquisition, Ardonagh CEO David Ross, said: “This is a compelling shakeup of the global wholesale landscape, bringing two of the last remaining independent outfits of scale together to create the largest privately owned specialty broker in London, safeguarding choice for both clients and employees.”
“This is a hugely complementary acquisition, aligning and accelerating our ambitions in the global specialty arena,” said CEO of Ardonagh Specialty, James Masterton. “The specialist broking and underwriting teams within the BGC operations are highly respected in their fields and their market leading progress in digitization matches our own. We know that clients are looking for more innovation, for both product and capacity delivery, and our joined-up efforts in this space will ensure we remain competitive.”
“Ardonagh is an excellent partner to continue our insurance brokerage business. The combined platform will add to their strength, capability, and create the world’s leading independent specialty insurance broker,” affirmed Howard W. Lutnick, chairman and chief executive officer of BGC, headquartered in New York and London.
“While our insurance brokerage business provided less than 10% of BGC’s total revenue over the trailing 12-months, the $500 million of cash that we expect to receive represents over 17% of BGC’s fully diluted market capitalization,” he said in a statement.
BGC said the sale proceeds will provide additional capital to invest in its Fenics business, which operates electronic trading platforms.
“While the growth of our insurance brokerage business was industry-leading, we believe the scale and scope of the Fenics opportunity is far greater, with potential to drive shareholder value materially higher,” Lutnick added.
Formed in 2017, Ardonagh’s brands include Autonet, Arachas, Bishopsgate, Broker Network, Carole Nash, Compass Networks, Ethos Broking, Geo Underwriting, Price Forbes, Swinton, Towergate and URIS. With a UK headquarters in London, Ardonagh’s registered address is in St. Helier, Jersey, one of the Channel Islands off the coast of the UK.
Ardonagh describes itself as the UK’s largest independent insurance distribution platform and a top 20 broker globally.
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