By James Thaler
Jan 31 - (The Insurer) - Howden Group is in discussions with Risk Strategies parent Accession Risk Management over a potential deal that would see the David Howden-led UK broking group make its long-expected entry into US retail broking, The Insurer understands.
Sources have told The Insurer for the past month that discussions are under way about a potential deal for Howden to acquire Accession, with the firm also remaining in talks with an undetermined number of other interested parties. The discussions are expected to culminate in a transaction in the weeks ahead.
A successful deal would be the latest in a series of major acquisitions by Howden, including its £1bn+ agreement to acquire UK broker Aston Lark in 2021, the $800mn acquisition of US MGA platform Align the same year, as well its $1.6bn swoop for reinsurance intermediary TigerRisk Partners in 2022.
Boston-based Accession is the holding company that was formed in October 2023 to sit above privately held retail broking firm Risk Strategies and Matt Power-led wholesaler One80 Intermediaries.
Risk Strategies was the 14th-largest retail broking intermediary in 2023, generating $1.45bn in brokerage revenues. It was launched in 1997 by industry veteran Michael Christian, who served as CEO from its founding before transitioning to executive chair in 2019.
At that time former Willis executive John Mina – who now serves as CEO of Accession – took over running Risk Strategies. Accession is understood to have more than $15bn in premium under management across the US and Canada.
Accession has made more than 170 acquisitions since Risk Strategies and One80 were launched, with overall headcount somewhere around 5,000. In 2015 mid-market private equity firm Kelso & Company acquired a majority stake in Risk Strategies from Kohlberg & Company.
One80 was launched under Power’s leadership in 2019.
A deal with Howden would mark a successful liquidity event for Accession’s investors, after the company explored a number of potential transactions with financial sponsors and strategic acquirers in the last few months of 2024.
Howden is widely understood to have been pursuing an acquisition of a US-based retailer for the better part of the last 18 months, having held talks with a number of potential acquisition targets, including Carlyle-backed Galway Holdings.
Galway Holdings was formed in 2020 through the combination of Oak Hill Capital-backed retailer Epic Insurance Brokers & Consultants and Carlyle-owned US wholesaler Jencap.
Sources have said that Howden’s planned acquisition of a major US retail broking player is expected to precede a potential IPO in 2026, with the growth opportunity within US retail expected to be a key part of the business’s pitch to public investors.
However, the broker’s move into US retail could create disruption within its UK wholesale business if US retailers and wholesalers become reluctant to trade with Howden in the UK if it also owns a US-based competitor.
Clarity around Howden’s funding for the proposed deal has yet to emerge, with the broker having been linked with a $2bn raise through Abu Dhabi sovereign wealth fund Mubadala in recent weeks.
The broker’s most recent raise came in the first quarter of 2023 when it finalised a $500mn seven-year term loan with more than 60 lenders, while also increasing its revolving credit facility from £185mn to £360mn across a range of banking relationships.
Howden benefits from long-term institutional backing from General Atlantic, Hg Capital and CDPQ, the three largest shareholders in the company.
General Atlantic first invested in the group in 2013, with CDPQ investing in 2018 and Hg Capital in 2021.
Howden Group rebranded from Hyperion in 2020, having originally launched as Howden Pangborn in 1994. The Hyperion brand was adopted following the launch of MGA unit Dual in 1998.
Wave of consolidation
Howden’s move to acquire Accession comes ahead of an expected wave of consolidation in the large-scale retail broking market, amid increasing scale among privately held intermediaries and improved funding conditions. In addition, antitrust enforcement under the Trump administration is expected to ease.
Aon announced its plans to acquire Willis Towers Watson in the final year of the last Trump administration, only for the deal to be blocked in 2021 by the Department of Justice during the Biden administration.
The Insurer broke the news of Arthur J Gallagher’s $13.5bn acquisition of AssuredPartners in December, which came on the heels of Marsh’s September 2024 acquisition of McGriff from TIH for $7.75bn and Aon’s $13bn deal for NFP, which closed in April 2024.
In the announcement of the deal between Gallagher and AssuredPartners, the two sides said that AssuredPartners generated around $2.9bn in pro forma revenue and $938mn in pro forma Ebitda for the trailing 12 months up to 30 September 2024.
Assuming Accession generated the $2bn in revenues it targeted in 2024 and ran at a similar 32 percent margin as AssuredPartners – meaning it posted $647mn in Ebitda – and if it were valued at the same 14.3x Ebitda multiple, Howden’s deal could value Accession at around $9.25bn.
However, sources suggested that Accession’s valuation in a deal with Howden is likely to be substantially higher, given that its business is much more heavily integrated than AssuredPartners, pointing to the economics of the NFP deal and the 15x multiple it achieved as a better approximation of the valuation Accession could achieve.
That would point to a potential valuation much closer to the $13bn NFP deal, or perhaps even higher – a scenario in which the Accession deal has the potential to rank among the largest ever brokerage M&A transactions.
The Insurer also broke the news in August 2024 that Accession had closed a $1bn oversubscribed financing, with Golub Capital serving as administrative agent, lead arranger and joint bookrunner.
The financing included a $900mn delayed draw term loan (DDTL) to increase the Kelso & Co-backed firm's unitranche loan, along with a $100mn increase to its revolving line of credit.
Accession said at the time that the additional funding would further accelerate its "remarkable" growth trajectory both organically and through M&A, as it targeted a $2bn top line for 2025 on a path to hitting $3bn by 2028.
The financing was the latest by the insurance distribution platform involving Golub Capital and came a year after an upsized $700mn DDTL and $300mn preferred equity issue that was supported by a quartet of institutional investors.
In other recent major US broking M&A, US super-regional bank Truist Financial Holdings fully spun off its insurance subsidiary – which included wholesaler CRC Group, McGriff and an MGA business featuring cat-focused AmRisc – in May 2024.
CRC has been repositioned as an independent wholesaler, messaging it has been using to recruit senior wholesale talent, supported by its private equity backers Stone Point Capital and CD&R.
Howden and Accession have been contacted for comment.
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