Howden eyes expansion before float

The boss of insurance group Hyperion talks IPOs, rapid growth and breeding longhorn cattle with James Waterson

TWENTY years ago simply being an insurer was enough to receive a right hook to the face from strangers, remembers David Howden.

“When Lloyd’s was having its difficulties [in the early 1990s] people were losing a lot of money,” explains the founder and chief executive of insurance broker Hyperion. “I went to a dinner party and someone took a swing at me when I said I was a Lloyd’s broker – that’s how unpopular we could be. It was very specific to insurers, he didn’t do the same to a banker.”

Back then the Lloyd’s of London market was in turmoil after money flooded into the industry, much of it underwritten by wealthy individuals. When a series of major claims finally hit, these individuals were forced to pick up the bill – and in many cases lost all their possessions.

Howden is keen to contrast this with today’s UK insurance boom, which has seen the industry quietly thrive during the financial crisis and sparked the rush to build skyscrapers such as the Walkie-Talkie in the City’s insurance district around Fenchurch Street.

“This time around it’s the bankers that have messed everything up and everyone’s taking a swing at the City in general. It is exasperating. There is still a massive focus on banking in the City, from the Lord Mayor’s office downwards through to the government and trade bodies and it would be quite nice for us to be separated from that.”

Howden, an early riser with a mop of floppy hair, is an endlessly enthusiastic advocate of an industry that suffers from the perception that it is dominated by grey men. He now finds himself the head of a fast-growing group worth £250m that offers underwriting and broking services to commercial insurers.

“I don’t think as a young child I woke up and thought I want to be an insurer,” he admits. Instead he joined the industry aged 16, having quit school when he broke his back in a rugby accident.

“I spent three months in traction not being able to move. I didn’t want to go back to school without being able to play sport so my mum said I’d have to get a job. I didn’t know what I could do with no qualifications – so I went into insurance. It was that or being an estate agent.”

Luckily, his name helped him into a job at Alexander Howden, a broker founded by his ancestors that had lost its family connection.

“My first lunch in the City was with a man who’s now a good mate. He took me to lunch and halfway through, aged 16, he turned and said ‘we all know why you got the job, none of us like you or respect you for it’.”

Following a series of career twists and turns, in 1994 he set up the company that would become Hyperion in a small office with a handful of staff and “a dog left by my ex-wife”. Early stage investor and old colleague Brian Marsh bought a 25 per cent stake for £25,000 and provided guidance.

Finding it hard to gain traction at home they instead took their products to new markets, starting with selling liability insurance in Spain and Germany. Nineteen years later revenues stand at £111m and the company employs 1,200 people around the world.

Hyperion has been the subject of IPO speculation for several years and Howden confirms that he still intends to go public at some point. But he says that the recent decision by private equity house General Atlantic to buy 30 per cent of the company has put paid to any float until 2014 at the earliest.

The deal offers the chance for Hyperion to bring in new expertise to help grow the business – and an opportunity for early investor Marsh to cash in to the tune of £29m.

“Hyperion is quite good at understanding capital markets and insurance but technology has been the downfall of a number of people who tried to grow,” he explains. “General Atlantic are very good at taking companies and making them global. They approached us and are very keen for us to expand very rapidly.”

To this end Howden reveals that the company is planning new acquisitions to boost its market share.

“We’ve got a couple of quite chunky M&A deals we’re looking at. We find emerging markets very attractive. We’re looking at Latin America, you’ll see us do more there.”

“Dual [the group’s underwriting division] has always grown organically, so more product lines could be interesting. We could acquire businesses for new products and we’ve got the right distribution to put it through.”

Meanwhile Hyperion employees have the chance to share in the success, with the company planning to offer all workers the opportunity to buy into the company: “I think that you get a better level of service at John Lewis so I’d love to the see the fantastic girls on reception as shareholders.”

Because the company has had an international focus from the start, Howden has little time for rivals that do not seek to export. He bemoans the government’s focus on boosting manufacturing exports when his own industry is largely overlooked by officials: “I was on a plane to Mexico not long ago and there was a trade delegation on the plane but there no insurer. You should compare the amount this country earns from insurance with manufacturing firms that are struggling.”

What’s more he envisages the entire industry transforming over the next 10 years with the power shifting to distributors rather than providers: “As the hedge funds move into the reinsurance market, so the reinsurers move into the direct insurance market. What matters today is whether you’ve got access to profitable business and can maintain those clients.”

Every morning Howden gets up at 4.30am to drive into the City from his home on the border between Oxfordshire and Buckinghamshire. Despite the gruelling commute he insists it’s worth it to indulge his hobby of breeding rare longhorn cattle and running other key community assets.

“I was bemoaning there was nowhere good to eat so I’ve bought the local pub, which I’ve renamed The Pointer. It was a really terrible pub that was run down. The backroom had one of those carpets that was a combination of old beer and piss.”

Now it contains a restaurant and a butchers, which has just started supplying meals to the local school.

“If I did something else I’d probably throw my weight behind Hugh Fearnley-Whittingstall’s campaign to reduce food waste,” he says. “But I’m only 49 and I’ll be here a while yet.”

CV DAVID HOWDEN
Lives: Oxfordshire/Buckinghamshire border

Position: Chief executive and founder, Hyperion Insurance Group

Past career: 1980-82 Marine insurance broker, Alexander Howden

1982-1988: Associate director, Nelson Hurst and Marsh.

1988-1991: Co-founds Howden Howells and Pangborn, a subsidiary of Regis Low.

1991-1994: Becomes managing director of Steel Burrill Jones Professional Risks following a takeover.

1994-present: Founder of Hyperion Group.

Education: Radley College until 15 then A-levels at a London college

Hobbies: Breeding cattle, running a pub, surfing, spending time with wife and three children.