UK insurance broker Howden to buy 100% in Indian arm

Mumbai: UK-headquartered insurance broker Howden will increase its stake in its Indian arm from 49% to 100%. The group, the largest non-US broker globally, has received regulatory approval for the transaction. Speaking to TOI, Howden India Insurance Brokers chairman Praveen Vashishta said that the increase in stake to 100% would allow the company to pursue inorganic growth by bringing in more capital.

Although Vashishta did not divulge the deal size, the transaction is expected to be in millions of dollars given that the company ended March 2022 with Rs 125 crore of income and Rs 34 crore of earnings before interest, taxes, depreciation and amortisation (ebitda).

The company now targets to double business organically by FY26 and achieve Rs 250 crore of income after increasing employee headcount from 250 to 400. In India, Howden has built a reputation of being an arranger of speciality insurance covers. It has facilitated insurance cover for 27 Indian metro projects, including the one at Kolkata that witnessed a claim. It has also been a pioneer in liability insurance like directors & officers cover and cyber risks supported by its global network, including a cyber insurance academy in Israel.

Of the remaining 51% in the Indian joint venture, 46% was held by Vashishta and 5% by Aruna Chainani. Even after the buyout, the leadership team would remain unchanged, with Vashishta staying as chairman of Howden India and Mahesh Chainani as director and principal officer. According to Vashishta, the insurance broking industry has seen consolidation, and the increase of stake by Howden allows it to attract more talent.

Employees of Howden hold 35% stake in the company, and it also has strong private equity investors, including General Atlantic, CDPQ and Hg. Globally, it has expanded on the back of the acquisition of regional firms. However, in India, the growth has been organic due to the UK giant holding a minority stake. Vashishta said that the company would look at new ways of blending its expertise in insurance with distribution capability to reach out to more customers, including the small business segment.

In India, international insurance brokers, including Marsh, Aon, Willis and Gallagher, have hiked stakes in their operations here. Although the investments have not been disclosed, industry estimates place the amount at more than $100 million. The investments by broking giants have been much more than by reinsurance firms. While broking firms do not add to the underwriting capacity, they increase insurance penetration by bringing expertise in designing new covers.