In the latest episode of Leading Voices on The Insurer TV, Power also revealed that One80, which was established in 2020 when it had just 60 associates and about $14mn of revenue, will see its headcount exceed 2,000 by year-end.
The firm has been set up under five basic pillars: contract binding, wholesale binding, program business, specialty practice and affinity practice.
And speaking in the Lloyd’s building, Power highlighted the strong ties with London as a specialty insurance market.
“Specialty is really at the core of our business model. We felt at the inception of One80 we did not want to build a generalist broking operation. We wanted one that was focused on underwriting, focused on specialty and creating value based on the deep level of specialisation that each of the acquisitions and each of the divisions brought to the table,” he explained.
Power said that London is a market focused on specialty, specialisation and innovation.
“It’s the cradle for innovation for our industry,” suggested the former AIG and Lexington executive.
One80 leverages these strengths in the London market through some 20 coverholder agreements with Lloyd’s, as well as through business placed on an individual risk basis into the London market.
Outsized M&A valuations “not the new normal”
One80 has been an active acquirer of businesses as it has rapidly grown in the last two years.
But Power said the headline oversized Ebitda multiples for some transactions should not be considered as the new normal in the market. While there can be certain transactions where multiples go above the average, they should be regarded as exceptional.
“I think that there’s a tendency on the part of industry observers to look at valuations, especially the outsized valuations, and think it’s the new normal. In fact it’s not.
“Most of the transactions we are seeing are falling into a range of 8x to 11x – it’s probably the sweet spot – which I consider to be quite reasonable, given the current market. So the tendency to look at these megadeals with very, very large multiples I think is a bit of a false signal,” Power added.
The executive also highlighted the importance of culture in M&A transactions, especially for a company that is “very selective” in the transactions it pursues.
“One of the things I note is that probably the last six or so transactions that we signed we were not the high bidder. So why do we win? We win on culture,” he commented.
He said that One80 places employees at the centre of its business, which he believes is an essential approach for the company to thrive.
“If you support your employees and create an environment where they love coming to work, they love their jobs and there’s a great sense of security and value in what they do, they’ll bring it every day. They’ll do a great job for our customers,” he added.
During this interview, Power also discusses the following:
- One80’s growth achievements and targets
- The role of specialty and specialised solutions at One80
- One80’s proposition versus PE-backed consolidators and aggregators
- The current M&A market