Insurance broker LHK Group to buy two smaller rivals

LHK Group, the Leinster-based insurance and financial planning broker, has moved to acquire two smaller Dublin peers, Richardson Insurance Solutions and The Insurance Shop, for undisclosed sums.

It is understood that the deals will increase the gross annual premiums written by LHK, a third-generation family-owned business run by managing director Colm Kelleher, by about a third to €40 million.

Established in 1938, they are one of the oldest brokers on the island of Ireland and act for owner-managers, entrepreneurs, sole traders, partnerships and family businesses.

Richardson Insurance Solutions, led by Derek Richardson, specialises in providing cover within niche markets such as leisure, hospitality, motor caravans, salons and trades insurance. The deal is subject to regulatory approval and will see all of Richardson Insurance's 10-strong team join LHK.

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Headcount of 46

LHK also recently acquired The Insurance Shop, a three-person operation, that has traditionally focused on coverage for retail shops.

LHK’s headcount will rise to 46 as a result of both deals.

“In an era of increased foreign ownership of Irish brokers, we see our position in the market, as a locally owned and managed broker, being a key differentiator in an increasingly consolidated market,” Mr Kelleher said.

The wider Irish market has seen a flurry of broker deals in the past five years as it followed waves of consolidation in the UK and North America. The ultimate backers of most of the purchasing vehicles are private equity firms.

Fee-based business

The attraction for financial investors lies in the fact that insurance broking is a fee-based business that delivers steady revenues through the economic cycle, and strong cash flows that allow buyers to service the debt needed to finance further deals.

The most active dealmaker in recent times has been Arachas, whose name is Irish for insurance. Arachas itself was acquired in 2020 by Ardonagh, a private equity-backed UK brokerage group.

UK-based insurance intermediary PIB Group moved last year to buy three Irish brokerages, including Wexford-based Campion Insurance.

Elsewhere, private-equity firm MML Growth Capital Partners Ireland has dived into the broker space in recent years using a vehicle called Innovu to mop up a series of businesses.