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London-based insurance and reinsurance broker Howden Group Holdings Ltd. said Thursday it has acquired U.S. reinsurance brokerage TigerRisk Partners LLC.
Sources close to the deal said the purchase price was $1.6 billion.
The combined reinsurance business will have close to $400 million in reinsurance brokerage revenue and employ about 450 people, a Howden statement said.
The two companies have little business or geographical overlap, Howden Group CEO David Howden and Rod Fox, executive chairman and co-founder of TigerRisk, said in an interview Thursday.
Howden’s managing general agency and insurance brokerage business will complement TigerRisk’s reinsurance broking and capital markets advisory business, Mr. Howden said.
In addition, the deal will allow TigerRisk to leverage Howden’s international relationships and increase Howden’s U.S. presence, Mr. Fox said.
“Scale is important in this business,” Mr. Howden said.
Stamford, Connecticut-based TigerRisk, which is the fourth largest reinsurance brokerage, reported $145 million in gross revenue in 2020, according to Business Insurance’s most recent directory of reinsurance brokers. Its business make up was 83% property and 17% casualty, and it had 220 employees.
TigerRisk was formed in 2008 by Mr. Fox and fellow industry veteran Jim Stanard. Private equity firm Aquiline Capital Partners LLC invested in the company in the company in 2009 and sold its stake in 2012. In 2020, private equity firm Flexpoint Ford LLC bought an unspecified stake in the firm.
According to a Flexpoint Ford statement, TigerRisk accelerated is recruitment over the past two years, which expanded its employee base by nearly 50% and grew its annual revenue by 25%.
Discussions between Howden and TigerRisk began at a high level before December, became more serious in December and they began “working in earnest” after New Year, Mr. Fox said.
Mr. Fox will become executive chair of Howden Tiger, the reinsurance business of the combined entity.
The deal comes at a challenging time for reinsurance buyers.
“On the catastrophe side it’s a particularly hard market,” for reinsurance, Mr. Fox said. “Limit is difficult to come by. June 1 in North America was a hard renewal and July will be harder,” he said, adding that cyber capacity was the hardest reinsurance capital to garner after catastrophe.
Mr. Howden said conditions were similar for the broker’s primary insurance clients. “It’s a challenging market out there for our clients at the moment.”
The transaction is subject to regulatory approvals.