The 2019 specialist broking start-up McGill and Partners is on course to surpass $100mn in revenues this year and will shortly enter positive cash-flow territory, its founding CEO has revealed.
- Roll-out accelerates in 2021 with headcount now at 364 at Warburg Pincus-backed start-up
- 2020 run-rate revenues $60mn
- 2021 “on course” to be Ebitda positive with ~$100mn revenues
- $1.8bn GWP placed into London/international markets
- Estimated to have used third of ~$300mn start-up capital
Speaking to this publication in the same week the London-headquartered firm files its first full-year trading accounts, Steve McGill said the intermediary has weathered the challenges of Covid-19 to hire over 360 staff, gain over 300 accounts and is now placing ~$1.8bn of gross written premium into the London and international markets.
On a run-rate basis – which doesn’t take account of deferring revenues for future claims and administrative handling – 2020 full-year revenues were $60mn, McGill and Partners’ CFO Oliver Corbett has confirmed to this publication. And he predicted that 2021 full-year results will see run-rate revenues exceed $100mn.
“Remember we only soft launched in October 2019 from a standing start … it meant in effect we missed 1.1.20 renewals”
Former Aon president and JLT CEO McGill welcomed the results as demonstrating the “tremendous progress we have made”.
“Remember we only soft launched in October 2019 from a standing start and with the natural delay of team members joining it meant in effect we missed 1.1.20 renewals. We were then confronted by the challenges of the pandemic and found ourselves implementing our crisis management plans only months after we launched, so to reach $60mn in our first full year of trading is an extraordinary achievement,” McGill explained.
“Momentum has further accelerated this year. We now have 364 highly talented team members and a strong recruitment pipeline which will see headcount grow to over 400 next year. We have recently launched our Dublin office to service our EU clients and have deep expertise in all of our chosen core specialties.”
McGill – who has over 40 years’ experience in the London broker market – is unwilling to discuss individual accounts but confirmed the Warburg Pincus-backed firm now has over 300 major accounts, most of which have been secured without any requests for proposal.
“We now have 364 highly talented team members and a strong recruitment pipeline which will see headcount grow to over 400 next year”
Market intelligence had previously identified major account wins such as Glencore, the world’s largest commodities trader and also the biggest London market marine cargo account, and international chemical firm Ineos, the UK’s largest privately held company.
Other notable wins for specific lines in 2020-21 are known to include Virgin Atlantic and DHL, Takeda Pharmaceutical, global offshore renewables business Ørsted, US healthcare multinational Cardinal Health and the world’s second-largest gold mining company Barrick Gold.
McGill commented: “We have a policy of not discussing clients but it is true to say that we represent some of the largest clients in the world in sectors such as energy and renewables, logistics, pharmaceuticals, healthcare, mining, manufacturing and financial services.”
Another key sector for McGill and Partners is reinsurance, both treaty and facultative, which has become the firm’s largest unit with over $40mn in run-rate revenues in 2021 and over 90 producers led by former Aon executive Angus Milgate and Paul Summers, formerly at Guy Carpenter.
“Reinsurance – which includes treaty, facultative and structured placements – has been an important division for McGill and Partners since we began. Clients want choice but they also require expertise, technical know-how, analytics and resource depth. We have demonstrated our commitment and it is gratifying that our clients see that.”
“From our earliest days, I felt there was a parallel with what has happened in investment banking”
McGill also says the successful build-out has affirmed the strategy of providing specialist boutique levels of service – both wholesale and retail – in chosen sectors.
“From our earliest days, I felt there was a parallel with what has happened in investment banking. Despite the pre-eminence of the global banks, we have also seen the stunning success of first-class specialist boutiques such as Evercore and Moelis & Co, who focus – above all else – on talent acquisition, specialisation and exceptional client service. That is precisely what McGill and Partners is doing in the areas of larger and more complicated corporate insurance and reinsurance transactions. We are not and never will be a generalist. It isn’t what our clients want,” he explained.
When McGill launched the business less than three years ago, he also put the emphasis on a rapid organic build-out rather than M&A. The Insurer wondered whether he might rethink this in a bid to accelerate growth further following its success in 2020-21.
But McGill said today’s news only makes that prospect less likely.
“Putting the focus on building an entrepreneurial and client-led culture from scratch works if – and only if – you can successfully hire key talent and attract clients. We are clearly doing this so there is no merit in changing strategy.”
“The opportunity is enormous, and we don’t need to cut corners”
McGill also added that the firm has avoided the emotional and time-consuming fallout of litigation over talent hires, in contrast to a number of its equally ambitious rivals that have become embroiled in high-profile disputes over team moves.
“The industry quite rightly puts an onus on the importance of utmost good faith. For us, that means when we hire colleagues they will have duties and obligations to their employer and we expect them to fulfil them. The opportunity is enormous, and we don’t need to cut corners. Our mantra is do things the right way and as a consequence litigation has not followed any of our first 364 hires,” McGill explained.
He added that the group’s focus on a partnership culture and incentive model helps cement a team ethos which encourages that approach. Since launch, the firm has used a model similar to the banking and insurance partnerships of old where producers and management are either investors and/or have ownership in the business.
Excluding new initiatives, the firm expects to move into positive Ebitda territory by the end of 2021, which puts the firm ahead of plan. Blue-chip private equity firm Warburg initially backed McGill with $250mn of committed capital in 2019, a figure which is thought to have nudged beyond $300mn with the contributions of the group’s senior management, which includes London market veteran and McGill’s former JLT colleague John Lloyd as chairman and former Aon executive Stephen Cross as head of strategy and innovation.
Sources have suggested the group has used around a third of its start-up capital base thus far, although McGill remains circumspect.
“It is fair to say we have used materially less capital than we expected and have gone much further than we expected,” he explained.
“It puts us in good stead for 2022 and beyond.
The Insurer comment
In addition to the strong revenue growth/major account wins, it is revealing that McGill and Partners has only drawn down a relatively small component of the ~$300mn of committed start-up private equity capital. This counters speculation from some competitors that the firm’s rapid build-out of talent must be draining resources and – more importantly – suggests substantial dry powder remains to fuel further expansion in 2022, with the focus likely to be on building out in the US…