Envest has grown to become a significant insurance distribution group following its pivotal decision to take a more active approach

By Wendy Pugh

After starting as a small investment company holding minority stakes in insurance enterprises, Envest has honed its focus on broking and underwriting agencies and accelerated its growth in combination with UK-based Ardonagh Group.

Envest, which launched in 2016, gathered momentum after covid restrictions forced a travel pause and created time to assess next steps following early years spent developing the business.

“We had always had more opportunity than capital, so we thought, how do we get a meaningful amount of capital into the business to really grow?” founding partner and Chief Executive Greg Mullins tells Insurance News.

A step-change came after Macquarie Principal Finance agreed to provide $50 million in late 2020.

This was rapidly invested and the focus shifted to taking majority stakes in businesses, while leaving them with day-to-day control.

The change also led to an expansion of Brisbane-based Envest’s own operations.

“That was probably the time we agreed Envest had to move from an investment company to an insurance distribution business,” Mr Mullins says. “We went from being a portfolio manager and managing assets to helping people run businesses better, and that meant we had to start investing in the infrastructure in Envest.”

By late 2022, Envest had brought together a number of brokers under the Aviso banner and its portfolio included direct-to-consumer insurance brands and underwriting agencies such as Blue Zebra and landlords specialist SGUA. On the technology side it supported innovation through Insurtech Gateway.

Then, global group Ardonagh announced it was acquiring Envest in a $482 million deal, completed in February last year. The transaction has given Ardonagh a majority stake while local management continues to hold equity.

Envest held more extensive operations in Australia relative to Ardonagh at the time of the offer.

“When we got approached by Ardonagh, it was quite timely, because that brought a couple of things to the table which were very interesting to us,” Mr Mullins says.

Ardonagh’s Resilium authorised representative network, which had been expanding since it was spun-off from Suncorp in a management buyout, opened new opportunities and complemented Envest’s Aviso broking group.

The British broking company had made its major move into Australia with the Resilium acquisition in 2021, and had appointed insurance sector veteran Paul Lynam, who has more three decades’ insurance experience, as its local chairman.

Ardonagh, which was pursuing international expansion “at pace”, also acquired the insurance operations of global brokerage and financial technology company BGC Partners. The deal included Sydney-based Epsilon Underwriting, previously chaired by Mr Lynam.

Mr Mullins, who had worked with Hollard in South Africa and Australia before forming Envest, says he had known Mr Lynam a long time and when Ardonagh made contact the opportunity was attractive. The two business were also aligned in their approach.

“I really liked the executive team out of the UK, they were similar to us, culturally a great fit, and Ardonagh backs businesses and management teams around the world and lets us get on and do what we do in each jurisdiction,” he says. “We’ve found them to be incredibly supportive. They are not looking over our shoulder and telling us what to do. They are saying, ‘How can we help?’ ”
Envest now places more than $2 billion in premium across the combined operations, with about $1.36 billion in broking and $750 million through underwriting agencies forecast this year. It has about $240 million in revenues and 720 people across the group.

Last November, long-term supporter Macquarie Principal Finance returned as an Envest shareholder, picking up a 15% stake that valued the business at more than $1 billion.

“It is a vote of confidence because, between the debt and equity, it’s a big commitment, and for a small business we’ve actually got quite a lot of firepower behind us now, between Ardonagh and various sources and Macquarie,” Mr Mullins says.

The executive team led by Mr Mullins includes Envest Agencies Chief Executive Richard Heilig, formerly with Hollard, and Chief Distribution Officer and Resilium Chief Executive Craig Robson. David Ball, who was national head of insurance at Macquarie Group, joined as Chief Investment Officer last March, supporting Envest’s merger and acquisition focus, while other key executive hold roles in operations and legal and compliance.

Mr Lynam chairs the nine-member board, which includes Mr Mullins, directors representing Ardonagh and Macquarie, and local insurance leaders Barry Fitzpatrick and Adrian Kitchin.

The hard insurance market has fuelled revenue rises achieved through Envest’s business growth, and the group plans to improve efficiencies and remove back-office duplication to put it in a stronger position through inevitable turns in the market cycle.

“That’s where a huge part of our focus and investment will be, certainly over the next couple of years,” Mr Mullins said. “It’s been a hard market for a lot longer than everyone anticipated; the market will soften, and then the focus is on how well are we running our operations, and I think we can do a lot better.”

At the same time, there’s no shortage of business opportunities. Potential transactions are identified at the group level and in conjunction with the leaders of various businesses. Mr Mullins says last year was a major one, with some 40 acquisitions, mostly in broking, while some underwriting agencies were also added.

“We feel like we are in a really fortunate spot. We’ve got a fantastic group of committed people and partners who are always on the lookout for like-minded people who run businesses we want to come into the group.”

Underwriting agencies generally have had strong growth and Mr Mullins says they are most successful when they are in a niche market or offering a niche product, and are then well supported by brokers.

“We’re not across all the product lines we want to be, so we’re always on the lookout for those sorts of opportunities, and we love the space,” he says.

Across its operations, Envest backs individuals who are starting out in the intermediary sector, growing businesses and ultimately looking to sell down or exit.

Mr Mullins says he is passionate about the authorised representative model in broking, and the pathway it provides for people wanting to participate in the sector.

“It is an opportunity for people in insurance who want to build and run their own business to go and do that, because one of the challenges we’ve got in our industry is that it is really expensive for young people coming through to buy their way into established broking businesses.

“The multiples are high, the profit margins are strong and it’s expensive. The authorised representative path gives people the opportunity to start something, and that’s what we’ve been doing in Resilium. We have supported a lot of people from scratch.”

Australia has thousands of authorised representatives, which sometimes become significant businesses, and the pathway also fuels acquisition pipelines as people reach later career stages or, for other reasons, seek to exit.

Within Envest, Resilium Insurance Broking connects a national network of authorised representatives, while Resilium Partners is the equity investment arm, encompassing a role also previously held by Ardonagh’s Ethos Broking Australia.

The Aviso Select authorised representative network was last year merged into Resilium, while the separate Aviso Group has centred on the owner-driver broking model and firms holding their own financial services licences. The Aviso brand is not yet represented in South Australia and may pursue opportunities there, while generally Mr Mullins says it’s “flying along”.

Envest’s businesses have mainly focussed on the SME space, and Mr Mullins says it is also building a “good and meaningful” corporate mid-market business.
Recent natural catastrophes have shown Australia can be a tough place to be an insurer, but in broking clients tend to remain loyal year after year, and the intermediary sector is a sweet spot for investment.

“There’s very few industries where there’s that sort of stickiness,” Mr Mullins says. “If you’re a good broker, you almost never lose a client. It’s an amazing place to be, and if you’re looking after that client, typically they’re referring business to you every year.”

A number of major broking groups are on the lookout for acquisitions, but Envest’s transactions are mostly not in competitive market situations and often result from long-term relationships with sellers who look at various qualitative factors in assessing buyers.

“It’s not all about the money because they care about their staff, they care about the legacy, and they want to know that the business is in good hands,” Mr Mullins says.

“Discussions sometimes take years before you actually do something together. A lot of people who join us are only selling part of their business. It might be to improve their lifestyle, shed debt, whatever it might be, but they want to continue on because they see that with Envest we can bring them good growth opportunities.”

Envest has become a buyer of choice for those looking to sell and its pipeline is strong, he says.