The results reported yesterday by The Ardonagh Group for the nine months ended September 30 revealed a mixed bag of opportunities and threats to the organisation. The group posted a £67.7 million loss in this period, which is attributed to additional finance costs and reduced tax credit, according to Ardonagh.
However, the group’s total income has improved from last year’s £403.5 million to £504.4 million and organic growth for the third quarter was 4.6%, representing the highest single quarter of organic growth since the group’s formation in May 2017.
Speaking about this organic growth, CEO David Ross said: “4.6% is a big number, especially when you take into account some of our product lines… to be able to drive a group 4.6% is a real tribute to the entire leadership team.”
People seem to be the focus for the group when it comes to its development strategy and CFO Diane Cougill said that a key metric of its reported income, which “you don't see in the numbers, is the full maturity of the [wholesale broker] hires we've been taking on in 17/18/19.”
Examining how those hires are maturing in terms of income they’re bringing into the business, Cougill said that these hires have contributed approximately £13 million so far this quarter on a 12-month basis, with this expected to develop even further.
Ross said when he first started his role, he was asked: “What makes you think you can fix the unfixable company?” For Ross, fixing the unfixable company means creating “a fantastic alignment between your investor base, your board, the management team and all your staff.”
Investing in people, Ross outlined, has also meant investing in software – from rewiring every single office with high-speed internet cables to purchasing 25,000 pieces of hardware for staff and new software for all this hardware.
Speaking about this organic growth of the group, Ross said that where Ardonagh has been particularly effective in the last few years has been in its redeployment of any money it has saved into organic investments, including new hires in London and elsewhere.
Another key metric for the group when it came to its organic growth has been its increasing retention rates in its advisory business which Ross states is “the bedrock of the company.” This rate has gone from 87% to 92%, thus allowing all new business growth to occur on a stronger foundation.
“For a business of our scale and an insurance broker to be driving that kind of growth is a real credit to the entire team,” he said.
Looking to the future, Ross also touched upon the requirement for inorganic growth by Ardonagh in the future. Fixing Towergate has been a large part of the company’s strategy for the last three years, he said, and now Ardonagh is questioning the essential next steps in its strategic development.
“This isn’t the end of the race,” he said. “This was the warm-up for the race itself….We are obviously going to be a very active participant in the UK insurance market when it comes to inorganic growth as well as organic.”
Ardonagh’s size and reach have given this organisation an incredible overview of the entire insurance sector and Ross detailed how there is very little that happens in the global insurance market that it doesn’t hear about in some way, shape or form. “We're standing on the bridge of a very big battleship and the view is excellent,” he said.
Outlining how the company’s growth strategy will not consist of expanding merely in the UK, but will mean following the premium flow, he said: “There are very sophisticated insurance markets around the world where we can probably see Ardonagh rolling into over time.”