Expertise and distribution – an EC3 broker’s tour with David Howden

An outside broadcast is a novelty for the Voice of Insurance, but knowing David Howden, CEO of Howden Group, his high-octane energy levels mean a walking tour blog make a lot of sense.

The latest Voice of Insurance podcast is a brisk walk through Howden Group’s past, present and future, starting with that original office location and the other London market locations crucial to the group’s evolution.

David Howden started what was then Howden Pangbourne, a small wholesale broker, just over thirty years ago with two others and, famously, a dog, in a tiny office on St Dunstan’s Hill in London.

“Distribution expertise. It’s been the same for 30 years. It hasn’t really changed,” Howden said.

He provided some colour to the “Howden 30/30” strategy, as his vision for the firm as it turns 30 and looks towards the year 2030. The plan aims to reach $10bn in revenue by 2030, with a focus on global expansion, reinsurance, and specialty lines.

“You never start with the numbers,” Howden said. “We want to build a great business that is truly global, and that its people are proud of. Pride is something people understand. Culture is very important to us.

“Also using our collective power collaboration to change the way people think about insurance. We want to grow the insurance market, and we think by then we’ll be at $10bn of revenue,” he added.

The conversation highlighted some key milestones, including the 2023 acquisition of US treaty broker TigerRisk, and the rise of the group’s reinsurance broking arm, Howden Re, which now generates roughly $600m in annual revenue.

“We formed the view that there was a genuine need for new reinsurance broker in the market,” Howden said. “A lot of talent has joined us, but also the clients; how many markets would there be where there are only three proper players offering an alternative?”

Talk of Howden Re as a “challenger broker” is over, he suggested. “We talk about being one of four global reinsurance brokers, and there’ll be areas…where we’re absolutely the leader,” he said.

He selected two examples of reinsurance broking leadership, picking on Howden Capital Markets & Advisory for alternative capital and insurance linked securities business, as well as reinsurance broking for managing general agents/underwriters (MGAs, MGUs) business, as two areas where Howden Re considers itself a leader. For the latter, he revealed that Howden Re places $600bn of reinsurance premium from MGAs or MGUs, excluding its own MGA arm.

Earlier, the chat touched on UK government engagement with the insurance sector, and Howden highlighted the need for a regulatory environment that encourages growth, referencing the declining percentage of companies choosing to list on the London Stock Exchange in recent years.

“The reality is, since the 2008 financial crisis, there has been an ever increasing amount of regulation, which, in my view, has stifled growth in the city,” he warned.

“You look at our counterparts across the Atlantic, the size of the American banks since then, their relevance, we have to make sure that we are encouraging growth, and that is about businesses.

“Obviously, as business people we get on and grow our businesses – we do what we need to do – but we do need a regulatory environment that encourages that as well,” Howden added.

Howden Group has evolved to include hundreds of offices in the UK alone, “A Great British story”, as Howden put it. On the retail side, he highlighted distribution as key to growth, since the broker expanded through more broking acquisitions into retail business in the late 1990s.

“What I’ve worked out, as I build this business, is that it’s really important to build your distribution,” Howden said, noting that this means not just personal lines but small and midsize corporate business, with people wanting to speak to their broker and understand their insurance needs.

DUAL, the MGA arm of Howden Group, was set up in 1997. Back then, he acknowledged, MGAs did not have a great reputation “like the chewing gum at the bottom of the shoe”, but hiring the right expertise to develop products – picking out cyber and warranty indemnity as examples – has been core to turning this perception around.

“MGAs are a key part of the market…DUAL has become a substantial business. It writes $3.5bn premium; we’re in 21 countries around the world; we’re truly international,” he said, adding that aside from a deal to buy Align in the US, the onus has been on organic growth.

Innovation in product design as well as distribution are MGA strengths, he emphasised. Stood outside the Lloyd’s building, Howden “celebrates the success of MGAs” – which still “raise eyebrows” when they grow fast.

MGAs have inherited some aspects of the “entrepreneurial spirit” that was more common among traditional Lloyd’s market syndicates in the pre Reconstruction and Renewal days when Names investors could invest – for good or ill – and entry barriers were lower – as well as levels of professionalism – before the advent of the current corporate capital system within the Lloyd’s market.

“The market has changed dramatically since that time,” he said, emphasising the strength of Lloyd’s today, relative to its teetering status in the early 1990s. “The really encouraging thing about the market is it is still absolutely the leading insurance market. Every single major broker has representation here. Every single major insurer and reinsurer has representation here.”