QUARTER 3 2019 RESULTS 20 November 2019 8 April 2019 Disclaimer - - PowerPoint PPT Presentation

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QUARTER 3 2019 RESULTS 20 November 2019 8 April 2019 Disclaimer - - PowerPoint PPT Presentation

QUARTER 3 2019 RESULTS 20 November 2019 8 April 2019 Disclaimer This presentation (the Presentation) has been prepared by The Ardonagh Group Limited (Ardonagh or the Group) and is its sole responsibility. For the purposes


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SLIDE 1

8 April 2019

QUARTER 3 2019 RESULTS

20 November 2019

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SLIDE 2

2

Disclaimer

This presentation (the “Presentation”) has been prepared by The Ardonagh Group Limited (“Ardonagh” or the “Group”) and is its sole responsibility. For the purposes hereof, the Presentation shall mean and include the slides that follow, any oral presentation by Ardonagh or any person on its behalf, any question-and-answer session that may follow the oral presentation, and any materials distributed at, or in connection with any of the above. The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is or will be made by any person as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information or opinions expressed in the Presentation. No responsibility or liability other than that implied by law is or will be accepted by Ardonagh, its shareholders, subsidiaries or affiliates or by any of their respective officers, Directors, employees or agents for any loss howsoever arising, directly or indirectly, from any use of the Presentation or its contents or attendance at any presentation or the question-and-answer session in relation to or in connection with this document. Ardonagh cautions that the Presentation may contain forward looking statements in relation to certain of Ardonagh’s business, plans and current goals and expectations, including, but not limited to, its future financial condition, performance and results. These forward looking statements may be identified by the use of forward looking terminology, including the words “aims”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, “plans”, “predicts”, “assumes”, “shall”, “continue” or “should” or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Ardonagh’s control, including but not limited to insurance pricing, interest and exchange rates, inflation, competition and market structure, acquisitions and disposals, and regulation, tax and other legislative changes in those jurisdictions in which Ardonagh, its subsidiaries and affiliates operate. As a result, Ardonagh’s actual future financial condition, performance and results of operations may differ materially from the plans, goals and expectations set out in any forward looking statement made by Ardonagh. All subsequent written or oral forward looking statements attributable to Ardonagh or to persons acting on its behalf should be interpreted as being qualified by the cautionary statements included herein. As a result, undue reliance should not be placed on these forward looking statements. The information and opinions contained in the Presentation have not been audited or necessarily prepared in accordance with international financial reporting standards and are subject to change without

  • notice. The financial results in this document and the Presentation include certain financial measures and ratios, including EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Organic growth and certain
  • ther related measures that are not presented in accordance with IFRS and are unaudited. These measures may not be comparable to those of other companies. Reference to these non-IFRS financial measures

should be considered in addition to IFRS financial measures, but should not be considered a substitute for results that are presented in accordance with IFRS. The information contained in the Presentation, including but not limited to any forward-looking statements, is provided as of the date hereof and is not intended to give any assurance as to future results. No person is under the obligation to update, complete, revise or keep current the information contained in the Presentation, whether as a result of new information, future events or results or otherwise. The information contained in the Presentation may be subject to change without notice and should not be relied on for any purpose. The Presentation is solely for informational purposes and does not constitute or form part of, and should not be construed as, an offer to sell or issue securities or otherwise constitute an invitation or inducement to any person to purchase, underwrite, subscribe to or otherwise acquire securities in Ardonagh or any of its subsidiaries nor does it constitute an invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000 (“FSMA”). The Presentation does not constitute an invitation to effect any transaction with Ardonagh or to make use of any services provided by Ardonagh. The distribution of the Presentation in certain jurisdictions may be restricted by law. Recipients of the Presentation should inform themselves about and observe such restrictions. Ardonagh disclaims any liability for the distribution of the Presentation by any of its recipients. This document is for distribution only in the United Kingdom and the Presentation is being made only in the United Kingdom to persons falling within Articles 19, 43, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended), to persons who have professional experience in matters relating to investments or to persons in the United Kingdom to whom this document may otherwise be lawfully distributed. This document is being supplied and the Presentation made to you solely in that capacity for your information. This document may not be reproduced, redistributed or passed on to any other person, nor may it be published in whole or in part, for any purpose. By accepting the Presentation, you agree and acknowledge (i) that the Presentation and its contents may contain proprietary information belonging to Ardonagh and (ii) to be bound by the foregoing limitations, undertakings and restrictions.

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SLIDE 3

Business Overview

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SLIDE 4

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Ardonagh in Q3 2019 – Another quarter of strong performance

1) Q3 2019 vs. Q3 2018 2)

  • Adj. EBITDA margin Q3 2019, including IFRS 16 impact

3) Operating Cash Conversion Q3 2019: Adj. EBITDA less working capital movement and maintenance capital expenditure, over Adj. EBITDA

28%

Q3 EBITDA Margin

(2)

A leading insurance distribution platform, connecting clients and premium to global capital

106%

Q3 Operating Cash Conversion

(3)

+4.6%

Organic Income Growth in Q3 (1)

“Best of the Best” Broker Award (Ardonagh) Commercial Lines Broker of the Year – SME/mid-corporate Business to Customer Marketing Campaign of the Year (Carole Nash) Business to Business Marketing Campaign of the Year (Paymentshield)

Ardonagh Today

Won five Health Insurance & Protection awards, including Adviser of the Year Gold Trusted Service Award; for client service excellence, 5th year running (Footman James) Awards won in last 12 months:

+28%

Reported Income Growth in Q3 (1)

UK Broker Awards - Ian Donaldson won Broker Personality of the Year URIS received Investor in Customer (IIC) Gold Standard for Customer Experience

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5

Ardonagh Total Income LTM (£ millions) 323.4 363.3 411.2 461.2 513.8 524.5 527.1 556.8 592.7 629.0 661.4 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2019 Pro Forma 21% 26%

  • Adj. EBITDA Margin LTM (%)

21% 21% 21% 19%

(2) (1) Creation of

22 June 2017

1) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal of Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19). Includes annualisation of IFRS 16 impact, cost savings from completed actions and actions expected to be completed during next 12 months

18% 18% 22% 30% Reported Income Reported Margins Q3 2019 Pro Forma

Ardonagh Today

Accelerating income growth and margin expansion

24%

(1)

Q3 2019 Pro Forma

(1)

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Established market leader with great future potential

Ardonagh Today Global scale and unparalleled diversity

Resilient and steadily growing market backdrop

Compelling strategy to optimise placement through scale and data

Disciplined and highly selective M&A strategy

Market leader in numerous specialist niches

Consolidation into three industry leading platforms to accelerated core organic growth

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7

£2,903 £905 £820 £695 £663 £661 £579 £335 £325 £253 £169 £152 £135 £119 £114 £100 £80 £80 £78 £74 £73 £65 £64 £61 £58

We are among the largest insurance brokers globally as well as in the UK

Source: IMAS Corporate Finance and Insurance Times Top 50 Brokers 2019 and Business Insurance Broker Profiles & Rankings 1) Pro forma for JLT 2) Pro forma for Miller 3) Includes income from PCW operations 4) LTM Q3 2019 Pro Forma Income 5) Based on 2018 Insurance and Financial Services segment per 2018 Annual Report. Not included in Insurance Times Top 50

Scale & Diversity Ardonagh Today

Top UK Insurance Brokers by UK Revenue 2018 (£m) Global Insurance Brokers by Global Revenue 2018 ($bn)

Personal Commercial Diversified (3) (4) (2) (1) (5)

$16.8 $10.7 $8.4 $5.1 $2.1 $2.0 $2.0 $1.7 $1.7 $1.4 $1.4 $1.1 $1.1 $1.1 $0.9 $0.9 $0.8 $0.6 $0.6

(1)

International Risk Advisory Group UK Commercial Lines Brokers Major US Commercial Lines Brokers

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SLIDE 8

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Highly diversified, resilient earnings base across products, channels, carriers and customers

Scale & Diversity Ardonagh Today

GWP by Class of Business(1) GWP Exposure by Carrier(1)

  • Highly diversified product portfolio

significantly limits reliance on single markets/ macro drivers

  • Long standing partnerships with key

carriers (more than 10 years on average)

1) Estimated Q2’19 LTM GWP pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal of Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

  • Over 25% of Ardonagh premium now

placed outside the UK

  • Only 1% premium from the EU/EEA
  • Non-UK income in Specialty protected

by Lloyd’s newly opened Brussels office

  • Increasing geographical diversification

GWP by Geographical Region(1)

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Resilient market Ardonagh Today

Dot.com Bubble (48%) decline in MSCI World Index1 Financial Crisis (55%) decline in MSCI World Index1 Source: ABI, Lloyd’s Statistics, MSCI, ONS 1) Peak to trough decline in MSCI World index Mar-00 - Sep-02 & Oct-07 - Feb-09

Lloyd’s and ABI broker channel GWP £bn, 1996-2017

Large and extremely resilient market, growing at c. 3% pa for the last 20 years, with limited impact from past economic or capital market downturns

c.3% p.a.

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10

GWP Clients UK position Established Higher barriers to entry Customer understanding Specialist knowledge Partnerships Higher retention Strong client relationships Stickiness of specialist products Higher margin Under-served markets Specialist products not available from major insurance companies

IFA Advised Home £120m 350k Van Agriculture Caring Professions Specialist Haulage Classic Car £95m 170k £80m 40k £65m 55k £45m 10k £25m 90k #1 #1 #1 #2 #1 #1 1992 1998 1981 1982 1974 1983 SME Healthcare £245m 25k #1 1907

We are a market leader in numerous high quality specialist niches, with higher barriers to entry, retention and margins

Market Leader Ardonagh Today

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" Our existing six operating segments are being consolidated into three industry leading platforms

Core Growth Ardonagh Today

  • Creating new product and

cross-selling opportunities

  • Leveraging the scale and

breadth we have built

  • Utilisation of

management expertise and “cross-fertilisation” of intra-group best practice Benefits from consolidation: Retail Paymentshield Schemes & Programmes Insurance Broking Specialty MGA Operating segments: Industry leading platforms: Advisory Retail Specialty

LTM Q3 2019 Revenue: £661m

Lutine

Assurance Services Limited

Revenue: £141m Revenue: £207m Revenue: £307m

Consolidation will enable delivery of sustained mid-single-digit

  • rganic growth and unlock further margin improvement

Note: Specialty and MGA businesses will continue to operate as separate segments

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12

  • Provide value added services to a

panel of selected strategic carriers, including risk mapping, pipeline management, underwriting and

  • perational insights, product

development

  • To date we have signed 3 strategic

carrier agreements and have ongoing discussions with several other potential partners

  • Design and launch new specialist

products across multiple segments by leveraging our deep market understanding and access to information

  • We expect to finalise the first

product facility by December 2019 with line of sight on several additional prospects for 2020 and beyond

  • Create strategic route into

alternative/ non-traditional capital providers to improve our offering to customers and insulate our distribution platforms from disruption in the value chain

  • Ongoing discussions with a number
  • f potential partners which are

expected to accelerate throughout 2020 Carrier Management Broker Facilities Alternative Capacity

  • We are leveraging our substantial investments in IT systems and data capabilities to support the implementation of an
  • ptimised placement strategy aimed at offering best in class products to our customers

Clear line of sight to substantial income and EBITDA growth based on activities currently underway

Placement Ardonagh Today

Ardonagh Portfolio Solutions “APS” - Leveraging group scale and data to

  • ptimise our products and services to our customers

APS is articulated across three pillars:

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Disciplined and highly selective acquisition strategy with a proven track record of integration and value creation

Selection Closing Integration Very robust, systematised process for identification and delivery of income and cost synergies within 12-24 months from acquisition Deal team highly focused on synergy assessment from early stages of the transaction Recent developments (incl. consolidation and APS) will create levers for additional synergies Strong track record of delivery as evidenced by recent Carole Nash and Swinton acquisitions Proven discipline on pricing and ability to move quickly combined with highly flexible and evolved structuring capabilities Highly experienced internal deal team leveraging an established panel of market leading external advisors Proven track record of completion post non-binding offer/ exclusivity (>90% completion rate) Thorough understanding of regulatory processes resulting in 100% success rate

  • f regulatory applications to date

Unparalleled reach into a highly fragmented market which will continue to consolidate due to financial and regulatory pressure Excellent network of relationships ensures early access to potential acquisitions, often on a bilateral basis Large scale, presence across multiple products and channels, private

  • wnership and culture proposition make

Ardonagh a compelling “home” for target businesses Robust selection and evaluation process ensure a highly efficient deployment of resources on high likelihood/ high value targets

M&A Ardonagh Today

Pipeline of high quality acquisition opportunities which will only be tapped into based on strategic fit and capital availability

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SLIDE 14

Financial Overview

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Reported income growth +27.6% and +710bps margin expansion in the quarter, driven by economies of scale and continued delivery of cost savings

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal of Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19) 3) Including £21.4m pro forma for annualised cost savings 4) 2019 results are set out post IFRS 16 implementation and 2018 results have not been restated to reflect this revised accounting standard in line with IFRS guidance 5) £9.7m IFRS 16 impact relates only to YTD Q3 2019; £13.0m expected for FY19

Overview Financial Update Reported Result Q3(1) Pro Forma Result Q3(2) LTM LTM Variance Variance Pro PF Adj. £m 2019 2018 £m % 2019 2018 £m % Forma(2) Q3 2019 EBITDA(3) Q3 2019 Income 168.0 131.7 36.3 27.6% 168.0 165.4 2.6 1.6% 661.4 Staff Expenses (82.0) (73.1) (8.9) (12.2%) (82.0) (82.0) (0.1) (0.1%) (313.7) Operating Expenses (43.3) (34.6) (8.7) (25.3%) (43.3) (48.3) 5.0 10.4% (185.0)

  • Adj. EBITDA (excl. IFRS 16)

42.7 24.0 18.6 77.5% 42.7 35.1 7.6 21.7% 162.6 184.0 Margin % 25.4% 18.3% 710 bps 25.4% 21.2% 420 bps 24.6% 27.8% IFRS16 Adjustment 3.5

  • 3.5

3.5

  • 3.5

9.7 13.0

  • Adj. EBITDA as Reported(4)

46.1 24.0 22.1 91.9% 46.1 35.1 11.1 31.6% 172.3 196.9 Margin % 27.5% 18.3% 920 bps 27.5% 21.2% 630 bps 26.1% 29.8% Staff Costs as % of Income 48.8% 55.5% 670 bps 48.8% 49.6% 70 bps 47.4%

  • Op. Expenses as % of Income

25.8% 26.2% 50 bps 25.8% 29.2% 350 bps 28.0%

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£592.7 £629.0 £661.4 £32.1 £1.0 £4.4 £32.4 (£1.2)

LTM Q2'19 Reported Income Acquisitions & Disposals FX/ Accounting Back-book Organic Growth LTM Q3'19 Reported Income Annualisation of Acquisitions & Disposals LTM Q3'19 Pro Forma Income

Organic growth of +4.6% delivered in the quarter, underpinned by strong growth from new producer hires, with improved performance across the business

(1)

Acquisitions: Swinton (3 months) Nevada 3 (3 months)

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal

  • f Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

+6%

  • vs. LTM

Q2’19 reported

+12%

  • vs. LTM

Q2’19 reported

Disposals: Claims (3 months) Commercial MGA (3 months)

(1) (2)

Acquisitions: Swinton (3 months) Nevada 3 (4 months) Disposals: Claims (0.5 months) Commercial MGA (3 months) Organic growth +4.6% in Q3 2019

  • vs. Q3 2018

New producer hires delivering growth +£1.3m FX impact in Price Forbes Hedge accounting Accounting standard changes Income Financial Update

Q3 2019 LTM vs. Q2 2019 LTM Income Bridge (£m)

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17

Good forward visibility of organic income growth, with strong positive momentum carried forward into 2020

Income Financial Update

1) For specific KPI definitions by operating segment see relevant operating segment slide in Appendix. Includes acquisitions and disposals from completion date

Substantial Further Upside from Specialty New Producer Hires Retention and # Policies Growth Q3 2019 vs. Prior Year Q3 2018 Q3 2019

£15-20m incremental income from investment to date

  • New producer hires in Specialty are driving substantial growth as

2017, 2018, 2019 cohorts rapidly approach income maturity

  • Line of sight to £15-20m incremental income p.a. within 24-36

months, with c. 50% gross contribution

  • 2019 cohort built further during Q3 2019 with a strong pipeline of new

talent and strong proposition to ensure high conversion rate Retention

87% 92%

+500bps

Insurance Broking Specialty Retail

1,645k

+200%

Sep’18 Sep’19 # Policies Under Mgmt. Paymentshield

462k

+4.6%

Schemes & Programmes

431k

+2.0%

(1) (1)

Total Retail

2,538k

+80%

551k 441k 422k 1,414k

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£136.9 £155.5 £162.6 £184.0 £13.2 £0.7 £4.7 £7.1 £21.4

LTM Q2'19 Reported

  • Adj. EBITDA

Acquisitions & Disposals FX/ Accounting Growth & Net Cost Savings Q3'19 LTM Reported

  • Adj. EBITDA

Annualisation of Acquisitions & Disposals Q3'19 LTM Pro Forma for Completed Transactions Annualised Cost Savings & Synergies Q3'19 LTM Pro Forma Adj. EBITDA +14%

  • vs. LTM

Q2’19 reported

(1)

+19%

  • vs. LTM

Q2’19 reported

+34%

  • vs. LTM

Q2’19 reported

£4.8m gross cost savings delivered, Organic growth

  • ffsetting cost

inflation and back-book FX cash impact in Price Forbes Hedge accounting Accounting standard changes

(1) (2) (2)

3) Post IFRS 16 implementation in 2019. 2018 results have not been restated to reflect this revised accounting standard in line with IFRS guidance 1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal

  • f Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

Acquisitions: Swinton (3 months) Nevada 3 (4 months) Disposals: Claims (0.5 months) Commercial MGA (3 months) Acquisitions: Swinton (3 months) Nevada 3 (3 months) Disposals: Claims (3 months) Commercial MGA (3 months)

(3)

£165.2

(3)

£143.1

(3)

£172.3

(3)

£196.9

Rapid growth in Adj. EBITDA as both acquisitions and cost savings convert into reported earnings

EBITDA Financial Update

Q3 2019 LTM vs. Q2 2019 LTM Adj. EBITDA Bridge (£m)

£24.6

(3)

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19

Strong improvement in quality of earnings as cost savings are delivered

EBITDA Financial Update

  • Improvement in LTM Adj. EBITDA driven by improvement in

underlying reported EBITDA as the result of income growth and successful delivery of cost savings programme

  • 47% increase in the LTM reported Adj. EBITDA from £112.6m

in Q3 2018 to £165.2m in Q3 2019

  • Increase in LTM reported EBITDA from £(13.7)m in Q3 2018

to £69.4m in Q3 2019

  • Exceptionals (excluding Swinton, M&A, financing and ETV

costs) representing 39% of LTM reported Adj. EBITDA in Q3 2019, a significant reduction vs. 61% in Q3 2018

  • In Q3 2019 only 13% of £46.1m Adj. EBITDA was Exceptional

costs, excluding Swinton and the one-off ETV provision adjustment in the quarter LTM Reported Adj. EBITDA Commentary

1) Reported result includes acquisitions and disposals from the completion date and the impact of IFRS 16 Sep’19 YTD

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Delivered Savings in Q3 2019 Annualised Savings for Actions Complete at Sep'19 Annualised Savings for Actions Complete at Sep'20 Q3'19 Pro Forma Adjustment

TWG Transformation 1.2 3.9 1.7 5.6 Original Synergies 0.8 0.6 0.6 1.3 New Synergies 0.3 0.9 1.5 2.4 Other Cost Reduction Plans 2.5 9.0 3.1 12.1 Total 4.8 14.5 6.9 21.4

£26.1 £21.4 (£4.8)

Q2'19 Pro Forma Adjustment Cost Savings Delivered in Q3'19 Q3'19 Pro Forma Adjustment

Further reduction of pro forma adjustment as an additional £4.8m cost savings are delivered into underlying EBITDA during the quarter

Pro Forma Adjustment for Future Benefits from Cost Savings and Synergies: (£m)

  • Pro forma adjustment for annualisation of cost savings of

£21.4m as at Sep’19 (11% Pro Forma Adj. EBITDA), has been reduced from £26.1m at Jun’19 and £36.2m as at Dec’18 (20% Pro Forma Adj. EBITDA), as cost savings are delivered

  • £4.8m additional cost savings delivered during Q3 2019,

primarily from Towergate transformation plan and central support services restructuring – 89% Advisory sites completed a full annual renewal cycle on Acturis by 15 Nov’19 – MGA restructuring savings post Commercial MGA disposal – Benefits from London footprint consolidation, central management and support services restructuring – Specialty operating structure and process efficiencies

  • £14.5m of identified cost savings are the result of the

annualisation of benefits from completed actions as at 30 Sep’19

  • £6.9m identified cost savings are the result of

annualisation of benefits from actions expected to be completed during the next 12 months to 30 Sep’20

  • Total of £21.4m clearly identified near-term annualised

cost savings and cost synergies

EBITDA Financial Update

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Margin improvement during 2019 and continued income growth, underpin further margin expansion expected in 2020

EBITDA Financial Update

Annualisation of savings from initiatives already underway:

  • £14.5m incremental benefit expected from annualisation of

actions already completed

  • A further £6.9m annualised benefit expected once these

initiatives are completed Additional cost opportunities under final stage of review:

  • Leverage combined group scale, breadth, data and digital

platforms to increase group-wide operational efficiency

  • Utilise group-wide experience, best practice, culture and

further structure simplifications to drive next wave of cost down opportunities

1) Reported Adj. EBITDA margins, excluding benefit from IFRS 16 implementation in 2019, set out on page 30

Further Margin Improvement Expected

  • Adj. EBITDA Margin Improvement Q3 2019 vs. Prior Year

£21.4m clearly identified savings from initiatives well underway

(1)

(80)bps

Retail

33.5% 32.7%

Paymentshield

63.2% 61.3% (190)bps

Schemes & Programmes

21.9% 27.1% +530bps

Insurance Broking

20.7% 25.7% +500bps

Specialty

13.8% 20.6% +680bps

MGA

1.4% 11.5% +1010bps

Q3 2018 Q3 2019

  • Adj. EBITDA Margin

Ardonagh

18.3% 25.4% +710bps

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SLIDE 22

22

1)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

2) Free Cash Flow defined as cash flow after proceeds from disposals, investments and interest, but before ETV costs, M&A and other financing cash flows 3) Movement in Available Cash as set out on page 7 of Ardonagh Report to Investors for the Nine Months Ended 30 September 2019

  • £10.7m of discretionary Business Transformation investment

and £1.4m Project Capex for Q3 2019 made up of: – £6.0m invested in Ardonagh cost savings programmes during Q3 2019, including business change resource, property footprint changes and redundancy costs – £6.0m invested in Swinton during Q3 2019 to close remaining 11 retail branches and accelerate integration

  • £3.0m legacy costs primarily legacy LTIP payments
  • No further interest payable on notes in Q4
  • M&A / Financing includes minority investment in Sino

Insurance, discretionary equity buy-out, appointed representative buy-outs and Swinton transaction/ financing costs

  • ETV redress payments stepped up with current run-rate at
  • c. £3.1m per month and c. £53m expected to be paid to

claimants over the next 12-18months

  • Q3 2019 net cash outflow of £33.4m, results in a closing

Available Cash of £63.2m, and with £90m Available RCF as at 30 September, a total Available Liquidity of £153.2m

Cash Financial Update

Operating cash conversion of 106% in the quarter

Q3 YTD Q3 £m 2019 2018 Var 2019 2018 Var Adjusted EBITDA(1) 42.7 24.0 18.6 134.7 89.5 45.2 Working Capital Movement 2.8 16.1 (13.3) (31.4) (24.3) (7.1) Maintenance Capex (0.3) (0.6) 0.3 (1.4) (1.5) 0.0 Operating Cash Flow 45.1 39.5 5.6 101.9 63.7 38.2 Operating Cash Conversion 106% 164% (59%) 76% 71% 4% Transformational Hires (3.2) (3.4) 0.2 (4.5) (14.1) 9.5 Project Capex (1.4) (3.1) 1.7 (6.6) (12.2) 5.6 Business Transformation (10.7) (6.2) (4.5) (34.2) (18.0) (16.2) Investment Spend (15.2) (12.7) (2.6) (45.3) (44.3) (1.1) Legacy Costs and Other Non-Recurring (3.0) (7.2) 4.3 (18.5) (22.6) 4.1 Interest on Notes and RCF (47.1) (38.7) (8.4) (90.2) (77.8) (12.4) Disposals (0.0)

  • (0.0)

25.7 42.4 (16.7) Free Cash Flow pre ETV, Equity, M&A(2) (20.2) (19.0) (1.2) (26.4) (38.5) 12.1 M&A, Equity, Debt Purchase (5.6) (7.6) 2.0 (18.7) (13.6) (5.1) Financing and Associated Costs (0.2) (4.3) 4.2 (7.5) 58.9 (66.4) Regulatory (incl. ETV redress) (7.5) (2.1) (5.4) (9.8) (3.5) (6.3) Net Cash Flow(3) (33.4) (33.1) (0.3) (62.4) 3.3 (65.8) Opening Available Cash 96.6 94.5 2.0 125.6 58.1 67.5 Closing Available Cash 63.2 61.4 1.7 63.2 61.4 1.7

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SLIDE 23

23

1) Available Cash as set out on page 7 of Ardonagh Report to Investors for the Nine Months Ended 30 September 2019; Excludes all TC2.4 restricted cash 2) USD 520m SSN at hedged USD/ GBP FX rate of 1.2742; USD 235m SSN at hedged FX of 1.2979; Note that Q3 2019 Interim Report translates USD debt at balance sheet FX of 1.2298 3) Pro forma interest excludes RCF commitment fees 4) RCF capacity agreed at £120m as at March 2019, £90m cap to permissible drawings as at 30 Sep’19 5) Available Liquidity defined as Available Cash plus Available RCF 6) Pro Forma Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019 7) Pro Forma Adj. EBITDA includes 13.0m and interest includes £6.2m expected full year IFRS 16 impact

Leverage Financial Update

Slight increase in Net Secured Leverage due to ETV payments, Available Liquidity remains substantial at £153.2m

£m Pro Forma at Dec'18 Jun'19(6) Sep'19(6)

  • Incl. IFRS 16

Sep'19(7) Available Cash(1) 125.6 96.6 63.2 63.2 Adjustment 20.0

  • Adjusted Operating Cash

145.6 96.6 63.2 63.2

  • SSRCF (£120m)
  • GBP Senior Secured Notes

553.3 553.3 553.3 553.3 USD Senior Secured Notes(2) 589.2 589.2 589.2 589.2

  • Net Secured Debt

996.9 1,045.9 1,079.3 1,079.3

  • Other Debt

4.6 4.5 4.6 4.6 Lease Liabilities

  • 43.5
  • Total Net Debt

1,001.5 1,050.4 1,083.9 1,127.4

  • LTM Pro Forma Adjusted EBITDA

186.5 181.1 184.0 196.9 Interest on Senior Secured Notes and SSRCF(3) 93.3 93.3 93.3 99.5 Net Secured Leverage 5.3x 5.8x 5.9x 5.5x Total Net Leverage 5.4x 5.8x 5.9x 5.7x Interest Cover 2.0x 1.9x 2.0x 2.0x Undrawn SSRCF (4) 120.0 120.0 120.0 120.0 Available Liquidity (5) 215.6 186.6 153.2 153.2

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SLIDE 24

24

Operating Cash Conversion Free Cash Flow

We are driving strong income and margin growth combined with improvement in cash flow, rapidly towards all our targets

  • Adj. EBITDA and Margins

Income and Organic Growth

3.5% 4.6% 2.5%

Target 4-6%

19% 26% 21% 30%

(1)

1) Pro forma for all material acquisitions and disposals. EBITDA includes annualisation of cost savings from completed actions and actions expected to be completed during next 12 months and includes IFRS 16 impact of £13.0m expected for FY19 2) Q3 2019 vs. Q3 2018

(1)

3) Ardonagh target organic growth 4) Adjusted for pro forma interest of £33.6m as no interest on SSN issued June’17 paid in 2017; excludes round-tripped interest from bond raises

(2) (3) (1)

Organic Growth:

  • Adj. EBITDA Margin:

>15% Adj. EBITDA Reported Reported

Disposal proceeds

Summary Financial Update Target >30% Target

(4)

slide-25
SLIDE 25

25

  • Strong Q3 income growth: +27.6% reported income growth, +4.6% organic income growth
  • Accelerated margin expansion: +710bps vs. prior year
  • High operating cash flow conversion in the quarter: 106%, 81% LTM, FCF neutral LTM
  • Good income/EBITDA visibility and strong trading momentum as we transition into 2020
  • Consolidating into three industry platforms to drive further income and EBITDA growth
  • Substantial additional upside potential from APS and highly disciplined M&A
  • Quality of earnings and cash flow expected to continue to rapidly improve

Summary

Summary Financial Update

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SLIDE 26

Appendix

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SLIDE 27

27

Segmental

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal

  • f Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

3) 2019 results are set out post IFRS 16 implementation and 2018 results have not been restated to reflect this revised accounting standard in line with IFRS guidance

Segmental Performance for Q3 2019

Reported Result Q3(1) Pro Forma Result Q3(2) LTM

  • Org. Gth
  • Org. Gth

Income £m 2019 2018 Variance (%) 2019 2018 Variance (%) Pro Forma(2) Q3 2019 Q319 v Q318 (%) Q319 v Q318 (£m) Advisory (Insurance Broking) 50.6 45.7 10.7% 50.6 48.7 3.9% 206.5 4.8% 2.2 Retail Operating Segment 56.5 21.2 166.3% 56.5 58.9 (4.2%) 215.3 (2.4%) (0.5) Paymentshield 10.8 10.5 2.9% 10.8 10.5 2.9% 41.2 13.1% 0.9 Schemes & Programmes 13.9 17.8 (21.5%) 13.9 14.1 (1.3%) 50.4 (0.4%) (0.1) Retail 81.2 49.5 64.1% 81.2 83.6 (2.8%) 307.0 1.0% 0.4 Specialty & International 27.4 22.5 21.9% 27.4 22.5 21.9% 104.8 15.8% 3.5 MGA 7.8 12.9 (39.4%) 7.8 9.5 (17.8%) 36.0 (11.6%) (1.1) Specialty 35.2 35.4 (0.4%) 35.2 32.0 10.1% 140.8 7.9% 2.5 Corporate 1.0 1.1 1.0 1.1 7.1 0.4 Income 168.0 131.7 27.6% 168.0 165.4 1.6% 661.4 4.6% 5.5 Reported Result Q3(1) Pro Forma Result Q3(2) LTM Adjusted EBITDA £m 2019 2018 Variance (£m) 2019 2018 Variance (£m) Pro Forma(2) Q3 2019 Advisory (Insurance Broking) 13.0 9.5 3.5 13.0 10.1 2.9 56.5 Retail Operating Segment 18.5 7.1 11.4 18.5 16.7 1.8 58.7 Paymentshield 6.6 6.7 (0.0) 6.6 6.7 (0.0) 25.9 Schemes & Programmes 3.8 3.9 (0.1) 3.8 3.1 0.7 10.5 Retail 28.9 17.6 11.3 28.9 26.5 2.4 95.1 Specialty & International 5.6 3.1 2.5 5.6 3.1 2.5 21.8 MGA 0.9 0.2 0.7 0.9 1.7 (0.8) 5.6 Specialty 6.5 3.3 3.3 6.5 4.8 1.7 27.4 Corporate (5.8) (6.3) 0.6 (5.8) (6.3) 0.6 (16.4)

  • Adj. EBITDA (excl. IFRS 16)

42.7 24.0 18.6 42.7 35.1 7.6 162.6 IFRS16 Adjustment 3.5

  • 3.5

3.5

  • 3.5

9.7

  • Adj. EBITDA as Reported(3)

46.1 24.0 22.1 46.1 35.1 11.1 172.3

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SLIDE 28

28

1) Reported result which includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal of Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

Summary Quarterly Financial Performance

Quarterly Summary Segmental

3) 2019 results are set out post IFRS 16 implementation and 2018 results have not been restated to reflect this revised accounting standard in line with IFRS guidance

Reported Result(1) Pro Forma Result(2) Income £m Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 YTD Q3'19 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 YTD Q3'19 Advisory (Insurance Broking) 47.6 51.3 45.7 45.8 190.4 49.6 56.7 50.6 156.8 50.4 56.7 48.7 48.7 204.5 50.5 56.7 50.6 157.8 Retail Operating Segment 18.1 22.8 21.2 16.5 78.6 52.1 58.3 56.5 166.9 59.2 60.5 58.9 48.4 227.0 52.1 58.3 56.5 166.9 Paymentshield 10.4 10.7 10.5 10.2 41.8 9.3 10.9 10.8 31.0 10.4 10.7 10.5 10.2 41.8 9.3 10.9 10.8 31.0 Schemes & Programmes 15.4 18.1 17.8 12.2 63.5 11.0 13.3 13.9 38.3 11.8 14.5 14.1 12.2 52.6 11.0 13.3 13.9 38.3 Retail 43.9 51.6 49.5 38.8 183.8 72.4 82.5 81.2 236.2 81.4 85.7 83.6 70.8 321.4 72.4 82.5 81.2 236.2 Specialty & International 24.0 22.7 22.5 26.0 95.2 24.9 26.5 27.4 78.8 24.0 22.7 22.5 26.0 95.2 24.9 26.5 27.4 78.8 MGA 12.1 15.4 12.9 11.4 51.8 8.9 11.4 7.8 28.1 8.4 11.0 9.5 7.9 36.7 9.0 11.4 7.8 28.1 Specialty 36.1 38.1 35.4 37.4 147.0 33.9 37.8 35.2 106.9 32.3 33.7 32.0 33.8 131.8 33.9 37.8 35.2 106.9 Corporate 0.2 3.0 1.1 1.7 5.9 1.6 2.8 1.0 5.5 0.2 3.0 1.1 1.7 5.9 1.6 2.8 1.0 5.5 Income 127.8 143.9 131.7 123.6 527.1 157.6 179.9 168.0 505.4 164.2 179.0 165.4 155.0 663.6 158.5 179.9 168.0 506.4 Reported Result(1) Pro Forma Result(2) Adjusted EBITDA £m Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 YTD Q3'19 Q1'18 Q2'18 Q3'18 Q4'18 2018 Q1'19 Q2'19 Q3'19 YTD Q3'19 Advisory (Insurance Broking) 12.6 15.8 9.5 7.5 45.3 14.6 21.1 13.0 48.8 13.1 18.6 10.1 7.6 49.4 14.7 21.1 13.0 48.9 Retail Operating Segment 4.9 8.8 7.1 3.3 24.1 11.1 19.2 18.5 48.8 11.3 19.6 16.7 9.9 57.5 11.1 19.2 18.5 48.8 Paymentshield 6.3 7.0 6.7 6.2 26.2 5.9 7.2 6.6 19.7 6.3 7.0 6.7 6.2 26.2 5.9 7.2 6.6 19.7 Schemes & Programmes 1.8 4.0 3.9 2.3 12.0 1.0 3.5 3.8 8.3 1.0 3.5 3.1 2.2 9.8 1.0 3.5 3.8 8.3 Retail 13.0 19.8 17.6 11.9 62.3 18.0 29.9 28.9 76.7 18.6 30.1 26.5 18.4 93.5 18.0 29.9 28.9 76.7 Specialty & International 6.0 4.0 3.1 6.6 19.7 4.4 5.1 5.6 15.2 6.0 4.0 3.1 6.6 19.7 4.4 5.1 5.6 15.2 MGA (0.4) 2.2 0.2 0.3 2.3 1.5 2.6 0.9 4.9 1.0 3.6 1.7 0.7 7.0 1.4 2.6 0.9 4.9 Specialty 5.6 6.2 3.3 6.9 22.0 5.9 7.7 6.5 20.1 7.0 7.5 4.8 7.3 26.7 5.8 7.7 6.5 20.0 Corporate (4.3) (3.2) (6.3) (5.5) (19.3) (3.5) (1.6) (5.8) (10.9) (4.3) (3.2) (6.3) (5.5) (19.3) (3.5) (1.6) (5.8) (10.9)

  • Adj. EBITDA (excl. IFRS 16)

26.9 38.5 24.0 20.8 110.3 34.9 57.1 42.7 134.7 34.4 53.0 35.1 27.8 150.3 35.0 57.1 42.7 134.8 IFRS16 Adjustment

  • 4.4

1.9 3.5 9.7

  • 4.4

1.9 3.5 9.7

  • Adj. EBITDA as Reported(3)

26.9 38.5 24.0 20.8 110.3 39.3 59.0 46.1 144.4 34.4 53.0 35.1 27.8 150.3 39.4 59.0 46.1 144.5

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SLIDE 29

29

Segmental

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal

  • f Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

3) 2019 results are set out post IFRS 16 implementation and 2018 results have not been restated to reflect this revised accounting standard in line with IFRS guidance

Segmental Performance for YTD Q3 2019

Reported Result YTD Q3(1) Pro Forma Result YTD Q3(2) Income £m 2019 2018 Variance (%) 2019 2018 Variance (%) Advisory (Insurance Broking) 156.8 144.6 8.4% 157.8 155.7 1.3% Retail Operating Segment 166.9 62.1 168.6% 166.9 178.6 (6.5%) Paymentshield 31.0 31.6 (1.8%) 31.0 31.6 (1.8%) Schemes & Programmes 38.3 51.3 (25.4%) 38.3 40.4 (5.3%) Retail 236.2 145.0 62.9% 236.2 250.6 (5.7%) Specialty & International 78.8 69.2 13.9% 78.8 69.2 13.9% MGA 28.1 40.4 (30.4%) 28.1 28.8 (2.3%) Specialty 106.9 109.6 (2.4%) 106.9 98.0 9.1% Corporate 5.5 4.3 5.5 4.3

  • Income

505.4 403.5 25.3% 506.4 508.6 (0.4%) Reported Result YTD Q3(1) Pro Forma Result YTD Q3(2) Adjusted EBITDA £m(3) 2019 2018 Variance (£m) 2019 2018 Variance (£m) Advisory (Insurance Broking) 48.8 37.8 10.9 48.9 41.8 7.1 Retail Operating Segment 48.8 20.8 28.0 48.8 47.6 1.1 Paymentshield 19.7 19.9 (0.2) 19.7 19.9 (0.2) Schemes & Programmes 8.3 9.7 (1.4) 8.3 7.6 0.7 Retail 76.7 50.4 26.3 76.7 75.2 1.6 Specialty & International 15.2 13.1 2.1 15.2 13.1 2.1 MGA 4.9 2.0 3.0 4.9 6.3 (1.4) Specialty 20.1 15.1 5.1 20.0 19.3 0.7 Corporate (10.9) (13.8) 2.9 (10.9) (13.8) 2.9

  • Adj. EBITDA (excl. IFRS 16)

134.7 89.5 45.2 134.8 122.5 12.3 IFRS16 Adjustment 9.7

  • 9.7

9.7

  • 9.7
  • Adj. EBITDA as Reported(3)

144.4 89.5 55.0 144.5 122.5 22.0

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SLIDE 30

30

1) Reported result which includes acquisitions and disposals from the completion date

Segmental Impact of IFRS 16 Implementation

IFRS 16 Impact Segmental Excluding IFRS 16 IFRS 16 Impact Including IFRS 16 Adjusted EBITDA £m(1) Q1'19 Q2'19 Q3'19 YTD Q3'19 Q1'19 Q2'19 Q3'19 YTD Q3'19 Q1'19 Q2'19 Q3'19 YTD Q3'19 Advisory (Insurance Broking) 14.6 21.1 13.0 48.8 1.9 0.6 1.1 3.6 16.5 21.8 14.1 52.4 Retail Operating Segment 11.1 19.2 18.5 48.8 0.7 0.7 1.0 2.5 11.9 19.9 19.5 51.2 Paymentshield 5.9 7.2 6.6 19.7 0.1 0.1 0.1 0.3 6.0 7.3 6.7 20.0 Schemes & Programmes 1.0 3.5 3.8 8.3 0.3 0.2 0.1 0.6 1.2 3.7 3.9 8.9 Retail 18.0 29.9 28.9 76.7 1.1 1.0 1.2 3.4 19.1 30.9 30.1 80.1 Specialty & International 4.4 5.1 5.6 15.2 0.5 0.6 0.6 1.6 4.9 5.7 6.2 16.8 MGA 1.5 2.6 0.9 4.9 0.4 (0.0) 0.3 0.6 1.8 2.6 1.2 5.6 Specialty 5.9 7.7 6.5 20.1 0.8 0.5 0.9 2.3 6.7 8.2 7.4 22.4 Corporate (3.5) (1.6) (5.8) (10.9) 0.5 (0.4) 0.3 0.4 (3.0) (2.0) (5.5) (10.5)

  • Adj. EBITDA

34.9 57.1 42.7 134.7 4.4 1.9 3.5 9.7 39.3 59.0 46.1 144.4

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SLIDE 31

31

Value Proposition and Growth Drivers

Largest independent UK SME insurance broker

Wide range of brands and distribution channels to meet current and future client needs

Trusted insurer partner relationships

Benefits from Acturis implementation and legacy system shut-down driving margin growth Integrated scaleable and efficient PAS platform, positioned for further growth

LTM Q3 2019 KPIs(1)

  • 5th largest commercial insurance broker in the

UK, and largest independent SME broker

  • Wide spectrum of competitive products and

services, focused primarily on commercial and SME

  • Distributed through own broker brands and

appointed representatives

  • Organised into three businesses (Advisory,

Health & Protect and Riskline/YourInsurance)

  • Advice-led client centric relationship business

with a community based approach combined with a national and international reach

+4.8%

Organic Growth(2)

£207m

Income

£57m

  • Adj. EBITDA

27%

EBITDA Margin

89%

Retention(3)

£22m

New Business

Significant increase in retention during 2019 underpinning income momentum into 2020

  

1) Pro forma for the acquisition of MHG and HIG (31 Jan’19) and transfer of Riskline from S&P 2) Q3 2019 vs. Q3 2018, organic income growth excludes acquisitions (HIG & MHG) and the CTM closed back-book 3) Retained income vs. prior year, LTM Q3 2019 pro forma for acquisitions and Riskline business transfer

Established SME broking and advisory platform, driving growth through trusted relationships to meet client needs

Overview Key Brands

Advisory Segmental

slide-32
SLIDE 32

32

Financial Highlights

  • Strong overall income growth driven by recent acquisitions

and underpinned by +4.8% organic income growth(6) as the result of continuing improvement in retention rates (+600bps

  • vs. prior year(4)), with growth in both Advisory and Health
  • Organic growth partially offset by SME closed back-book as

part of the strategic move away from online third party sales to focus on the telephone advice offering which delivers higher margins

  • Further execution of Advisory placement strategy to reduce

the number of carriers and deliver better outcomes for clients

  • Adj. EBITDA margin increase of +500bps driven by income

growth combined with delivery of cost saving plans

  • Towergate Health and Protection won five awards at the

Health Insurance & Protection Awards in October 2019, including Adviser of the Year Q3 2019 Key Highlights

Strong income growth of +10.7%, +4.8% organic growth. Margin +500bps as benefits from Broker System Consolidation are delivered

GWP £251.5m

+23.0% (Q3’18: £204.4m)

  • Adj. EBITDA Margin(3)

25.7%

+500bps (Q3’18: 20.7%)

Retention(4) 92%

+600bps (Q3’18: 86%)

New Business(5) £5.5m

+4.1% (Q3’18: £5.3m)

Insurance Broking Segmental Reported Result Q3(1) Pro Forma(2) 2019 2018 Change Q3 2019 LTM Income (£m) 50.6 45.7 +10.7% 206.5

  • Adj. EBITDA (£m)(3)

13.0 9.5 +3.5 56.5

  • Adj. EBITDA Margin

25.7% 20.7% +500bps 27.4%

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for the small acquisitions of HIG and MHG, completed 31 Jan’19 3)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

4) Retained income vs. prior year, pro forma for acquisitions and Riskline business transfer. On a reported basis, with acquisitions and disposals included from completion date Q3’18 was 87% 5) Gross new business before introducer/payaway costs 6) Organic income growth excludes acquisitions (HIG & MHG) and the CTM closed back-book

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SLIDE 33

33

Value Proposition and Growth Drivers

2nd largest UK personal lines broker in UK(1)

(Acquired: 2018)

Best-in-class digital, pricing and data capabilities enabling targeted new business growth

Attractive portfolio of leading mass-market and niche brands

Growing policy volumes and increasing retention resulting in real income momentum into 2020

Track record of digital innovation, capacity management and use of data

Overview

  • Digital-focused retail platform offering home, motor,

van and a range of niche, personal line and SME tailored products

  • Based in Stoke, Manchester, Altrincham, Southport and

Doncaster with c. 2,800 FTE

  • Data-led distribution strategy focused around online

channels (comparison websites and direct business), complemented by traditional call centre support

  • UK’s biggest van broker (via Autonet); UK’s biggest

motorbike broker (via Carole Nash and Swinton), leading home insurance provider through multiple channels, both direct and financial intermediaries (via Swinton and Paymentshield)

(Acquired: 2017)

Benefits from Swinton branch closures and cost savings underpinning 2020 margin growth

£307m

Income

£95m

  • Adj. EBITDA

31%

EBITDA Margin

75%

Retention(4)

2.5m

Policies(5)

+1.0%

Organic Growth(3)

1) By GWP, source Insurance Age 2) Pro forma for the acquisition of Swinton (31 Dec’18) and the disposal of Claims business (16 Oct’18) 3) Q3 2019 vs. Q3 2018. Organic income growth excludes acquisition of Swinton and the Claims Disposal, the impact of closed back-books and profit shares

Multi-brand personal lines digital platform, driving growth through leveraging advanced consumer data and pricing analytics

Key Brands LTM Q3 2019 KPIs(2)

4) Q3 2019, retained policies vs. renewals available for Retail Operating Segment and Paymentshield and retained commission vs. renewal commission available for Schemes & Programmes 5) Only includes “direct-to-customer” policies and excludes MGA and TPA customers

Retail Segmental

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SLIDE 34

34

Retail Retail Segmental

Financial Highlights

  • Strong reported income growth driven by acquisition of

Swinton, completed 31 Dec’18

  • Organic income decline of (2.4)%(5) vs. prior year (improved
  • vs. Q2) as the business continues to invest in accelerating

new business policy growth across all three brands

  • Stable total policies under management vs. Q2’19 including

Swinton, with new business policies written during the quarter significantly up vs. prior year for each of the three brands (Autonet +21.6%, Carole Nash +23.7%, Swinton +6.5%)

  • Margin broadly stable despite mix impact of Swinton at lower

margin, combined with investment in new business policy growth

  • Swinton delivered strong progress with cost reduction plans

and integration near complete. All branches have now been closed Q3 2019 Key Highlights

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for the acquisitions of Swinton and a small book-buy in Q1 2018 3)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

4) Pro forma for Swinton acquisition. Excludes closed book of monthly products. Retained policies vs. renewals available. Excluding Swinton, policies at Sep’18 were 551k 5) Organic income growth excludes acquisition of Swinton and the Ageas closed back-book

Integration of Swinton near complete with all branches now closed. Growth in new business policies written including Swinton vs. prior year

#Policies Under Mgmt.(4) 1,645k

  • 1.9% (Sep’18: 1,677k)

#Total Policies Written(4) 509k

+0.1% (Q3’18: 509k)

Retention(4) 70%

+140bps (Q3’18: 68%)

#New Bus. Policies(4) 209k

+12% (Q3’18: 187k)

Reported Result Q3(1) Pro Forma(2) 2019 2018 Change Q3 2019 LTM Income (£m) 56.5 21.2 +166.3% 215.3

  • Adj. EBITDA (£m)(3)

18.5 7.1 +11.4 58.7

  • Adj. EBITDA Margin

32.7% 33.5% (80bps) 27.2%

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SLIDE 35

35

Paymentshield Retail Segmental

Financial Highlights

  • Overall income growth of +2.9% vs. prior year, with +13.1%
  • rganic growth(3) (after excluding impact of closed back-

books and profit shares year-on-year variances), driven by continued strong retention rates and strong new business growth

  • Continued strong new business growth with new policies

written in the quarter +14% and total policies under management up by +4.6% vs. prior year

  • Lettings market continues to drive incremental volume
  • Migration of MPPI capacity yielding greater than expected

benefit, in terms of both volume and quality of earnings

  • Strategy of achieving sustained policy count growth, followed

then by sustained income growth, and finally by sustained

  • Adj. EBITDA growth remains on track

Q3 2019 Key Highlights

Income is growing as we grow both new business and our total policy book as well as sustain our high retention levels

#Policies Under Mgmt. 462k

+4.6% (Sep’18: 441k)

  • Adj. EBITDA Margin(1)

61.3%

  • 190bps (Q3’18: 63.2%)

Retention(2) 93%

Flat (Q3’18: 93%)

#New Bus. Policies 29k

+14% (Q3’18: 26k)

1)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

2) Retained policies vs. renewals available 3) Organic income growth excludes impact of closed back-books and profit shares

Reported Result Q3 Pro Forma 2019 2018 Change Q3 2019 LTM Income (£m) 10.8 10.5 +2.9% 41.2

  • Adj. EBITDA (£m)(1)

6.6 6.7 (0.0) 25.9

  • Adj. EBITDA Margin

61.3% 63.2% (190bps) 63.0%

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SLIDE 36

36

Schemes & Programmes Retail Segmental

Financial Highlights

  • Reported quarterly income and EBITDA impacted by disposal
  • f Claims business (16 Oct’18), excluding the disposal,

income declined 1.3% although Adj. EBITDA increased +21.7% vs. prior year

  • The strategic move to focus on higher margin, niche markets

continues to enrich Adj. EBITDA margin, and the decline in income slowed vs. prior quarters as agreed enhanced underwriting terms in the Caravan book (agreed 22 Jun’19) flow through to income

  • Organic income(6) in the retained business broadly stable at

(0.4)% in the quarter, improved vs. prior quarters, driven by Healthy Pets continued strong growth, offset by decline on the Caravan book (less severe than in prior quarters), and exit

  • f unprofitable business
  • Strong Adj. EBITDA margin improvement of +530bps,

primarily driven by continued strong delivery of cost savings (ahead of plan), including improved operational efficiency, re- platforming of PAS systems (over 90% complete), central support integration, and exit of unprofitable business Q3 2019 Key Highlights

Stable organic growth improving vs. prior quarters due to enhanced terms in

  • Caravan. Strong delivery of savings: +530bps margin growth

#Policies Under Mgmt.(4) 431k

+2.0% (Sep’18: 422k)

  • Adj. EBITDA Margin(3)

27.1%

+530bps (Q3’18: 21.9%)

Retention(5) 75%

Flat (Q3’18: 75%)

New Business £2.8m

  • 1.5% (Q3’18: £2.8m)

Reported Result Q3(1) Pro Forma(2) 2019 2018 Change Q3 2019 LTM Income (£m) 13.9 17.8 (21.5%) 50.4

  • Adj. EBITDA (£m)(3)

3.8 3.9 (0.1) 10.5

  • Adj. EBITDA Margin

27.1% 21.9% +530bps 20.8%

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for the disposal of the Claims business, completed 16 Oct’18 3)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

4) Only includes “direct-to-customer” policies and excludes MGA and TPA customers 5) Retained commission vs. renewal commission available 6) Organic income growth excludes the impact of the Claims disposal and profit share payments

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Value Proposition and Growth Drivers

Extensive global presence in 100+ markets and world recognised global heritage brand

Independent, market leading expertise and experience, with ‘in-house’ claims function

New producer hires not yet at full income maturity driving income momentum into 2020

Strong insurer relationships, built on direct interactions and proactive knowledge sharing

Leveraging end-to-end digital platform, ‘Edge’ tool for clients, markets and brokers already in place

  • Specialist wholesale brokerage, working across a

diverse range of geographies and markets

  • Two brands, combining heritage of Price Forbes

alongside challenger proposition of Bishopsgate

  • Wide breadth of specialisms across 44 products,

with specialist market expertise in; US Property, International Property, International Casualty, US Casualty, Aviation, Marine (incl. re-insurance)

  • Robust pipelines of new producer hires given

attractive proposition for talent

  • MGA specialised in niches covering non-standard

Property & Motor, Agriculture, Political Violence, and ATE

+7.9%

Organic Growth(2)

£141m

Income

£27m

  • Adj. EBITDA

19%

EBITDA Margin

7.6 years

Client Tenure(3)

15

New Hires LTM

Standardisation of processes and digitisation of front end portfolio offerings

1) Pro forma for the acquisition of PfP (31 Jan’19) 2) Q3 2019 Organic income growth excludes acquisitions and disposals, accounting standard changes, profit share and other non-recurring items and is stated at constant GBP:USD FX: 1.3052 3) Average client tenure, weighted by income for Price Forbes

Global distribution leveraging heritage brand and expertise at Lloyd’s, and market leading specialist MGAs

LTM Q3 2019 KPIs(1) Overview Key Brands

Specialty Segmental

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Reported Result Q3 Pro Forma 2019 2018 Change Q3 2019 LTM Income (£m) 27.4 22.5 +21.9% 104.8

  • Adj. EBITDA (£m)(1)

5.7 3.1 +2.5 21.8

  • Adj. EBITDA Margin

20.6% 13.8% +680bps 20.8% At Constant Forex & Excluding Hedge Accounting: (2) Income (£m) 26.0 22.5 +15.8% 105.1

  • Adj. EBITDA (£m)(1)

5.6 3.1 +2.5 20.3

  • Adj. EBITDA Margin

21.4% 13.8% +750bps 19.3%

Financial Highlights

  • Q3 2019 Income growth of +21.9%, organic income growth(2)

+15.8% (at constant FX rate), driven primarily by new producer hires

  • Q3 margin improvement of +750bps (constant currency)

driven by driven by growth from new producer hires and existing portfolios within Aviation, Casualty and Property

  • Strategic new producer hires in Professional Indemnity

generating income for Q3 with US Healthcare onboarded and expected income in Q4, which further emphasises our strategic vision to invest in top market talent, key clients and growth in niche and specialist areas

  • Acquisition of minority investment in Hong-Kong based Sino

Insurance Brokers now completed to complement existing APAC regional strategy

  • Trading unit rationalisation to enhance the clarity of our

specialism offerings whilst also forming the foundation towards modernising our operating model through process standardisation, consolidation, digitisation and automation Q3 2019 Key Highlights

Strong performance from new producer hires and cost control converts income growth into sustainable margin expansion

Client Tenure 7.6 years New producer hires Q3’19 LTM: 15

Specialty & International Specialty Segmental

1)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

2) Stated at constant GBP:USD FX: 1.3052 - Actual GBP:USD FX: average 1.2249 for Q3 2019 and 1.3052 for Q3 2018 (85% Q3 2019 income in USD), and removing the impact of hedging £1.3m

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Financial Highlights

  • Reported income and Adj. EBITDA impacted by disposal of

loss-making Commercial MGA business (1 Jan’19)

  • Retained business income down 17.8% in the quarter, costs

down 11.0% as the result of continued focus on operational efficiencies, resulting in margin down 680bps in the quarter although only down 240bps YTD given income seasonality

  • Q3 2019 organic income contraction(6) of (11.6)% vs. prior

year, impacted by a decline in Agriculture income, as planned rate increases are implemented contributing to a decline in renewals, combined with a contraction in Solis Re, our US MGA, which is now an asset held for sale

  • Geo Specialty delivered income growth of +23% in the

quarter vs. prior year, a trend that is expected to continue as the segment transitions towards maturity

  • Improvement of +4% in GWP in the quarter vs. prior year

within Personal Lines, despite challenging market

  • Headcount reduced by c. 57 FTEs (excluding the acquisition
  • f PfP) with continued focus on operational efficiencies

Q3 2019 Key Highlights

  • Adj. EBITDA margin improvement primarily driven by disposal of loss-making

Commercial business at the start of the year

GWP(4) £56.2m

  • 11.3% (Q3’18: £63.3m)
  • Adj. EBITDA Margin(3)

11.5%

+1010bps (Q3’18: 1.4%)

Loss Ratio(5) 67.1%

  • 110bps (Q3’18: 66.0%)

Headcount(4) 348

  • 7.6% (Q3’18: 378)

MGA Specialty Segmental Reported Result Q3(1) Pro Forma(2) 2019 2018 Change Q3 2019 LTM Income (£m) 7.8 12.9 (39.4%) 36.0

  • Adj. EBITDA (£m)(3)

0.9 0.2 +0.7 5.6

  • Adj. EBITDA Margin

11.5% 1.4% +1010bps 15.5%

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for the disposal of the Commercial MGA, completed 1 Jan’19 and the small acquisition

  • f PfP completed on 31 Jan’19

3)

  • Adj. EBITDA excluding benefit from IFRS 16 implementation in 2019, set out on page 30

4) Excludes Commercial MGA and includes internal transfers in both periods 5) Ultimate Loss Ratios, including paid, reserved and IBNR (incurred but not reported) claims and calculated on a calendar year basis with the same methodology applied across each year; excludes investment hire lines as insufficient claims experience to date – number as at Q2 2019 and excludes Commercial MGA and internal transfers in both periods 6) Organic income growth excludes acquisitions and disposals, accounting standard changes, profit share and other non-recurring items

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The Group presents results to investors using alternative performance measures (‘APMs’). Pro Forma for Completed Transactions information seeks to present the results as though the acquisitions of Swinton, Nevada 2 and a small book purchase as well as the disposals of the Claims and Commercial MGA businesses had occurred on 1 January 2018. The Group presents EBITDA and Adjusted EBITDA as important APMs for both reported and pro forma results. The objective of presenting APMs is to facilitate readers’ understanding of progress irrespective of the capital structure and before deduction of significant business investment and transformation costs, which have been a key element of the Group’s fix, build and grow strategy in recent years. This slide presents the reconciliations between the IFRS comprehensive gain/(loss) for the year and the key APMs. The full IFRS results can be found in the Ardonagh Group Report to Investors for the six months ended 31 June 2019 on the website www.ardonagh.com. EBITDA and Adjusted EBITDA measures may not be comparable to similarly titled measures used by other companies. EBITDA, Adjusted EBITDA and EBITDA margins are not measurements of financial performance under IFRS and should not be considered as alternatives to other indicators of the Group’s operating performance, cash flows or any other measure of performance derived in accordance with IFRS. The Group adopted IFRS 16 by applying the modified retrospective approach, which requires the cumulative effect of initial application of IFRS 16 to be recognised as an adjustment to the opening balance of retained earnings on the 1 January 2019 date of initial application, without restating prior years. As such, the 2018 profit and loss has not been restated.

1) Reported result includes acquisitions and disposals from the completion date 2) Pro forma for all material acquisitions and disposals including; acquisition of Swinton (31 Dec’18), acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19), disposal of Claims business (16 Oct’18), and disposal of Commercial MGA (1 Jan’19)

Note: Adj. EBITDA includes benefit from IFRS 16 implementation in 2019

3) 2019 results are set out post IFRS 16 implementation

Reconciliation of YTD IFRS Loss to Alternative Performance Measures

Reconciliation to IFRS

Reported YTD Q3(1) Pro Forma for Completed Transactions YTD Q3(2) 2019(3) 2018 2019(3) 2018 Reconciliation of the IFRS Loss for the period to EBITDA and Adjusted EBITDA Loss for the period (67.7) (48.9) (65.9) (68.2) Eliminate: Items excluded from EBITDA Finance costs 84.0 63.9 84.0 81.3 Tax credit (6.8) (19.9) (6.9) (20.1) Depreciation, amortisation and impairment of non-financial assets 71.4 54.9 71.6 61.3 Derecognition of assets following sale of business 0.8

  • 0.8
  • Fair value loss on derivatives

0.6

  • 0.6
  • Loss from disposal of assets

4.6 1.2 4.6 1.2 Foreign exchange movements 1.4 (0.3) 1.4 (0.3) EBITDA 88.2 51.0 90.2 55.2 Eliminate: Items excluded from Adjusted EBITDA Transformational hires 4.0 14.2 4.0 14.2 Business transformation 32.1 16.4 32.1 37.7 Legacy and other costs 6.0 16.0 6.0 16.0 Regulatory costs 9.3 (2.0) 9.3 (2.0) Acquisition and financing costs 4.1 1.3 2.8 1.3 Adjustment to gain on disposal of associate 3.3 (7.5) Gain on disposal of business (2.5)

  • Adjusted EBITDA

144.4 89.5 144.5 122.5 Reconciliation of IFRS loss for The Ardonagh Group Limited for the period to Alternative Performance Measures (£m)

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Ardonagh current shareholding

Shareholding

  • On 21 May 2019, HPS and MDP agreed to acquire Ardonagh shares

held by certain minority shareholders – following completion of the transaction, HPS and MDP increased their combined ownership in Ardonagh from 86% to 96%(1)

  • HPS and MDP launched the transaction entirely voluntarily and had

not entered into any other prior agreement which required them to enter into such transaction. The transaction was executed in accordance with the Shareholders’ Agreement and the other constitutional documents for The Ardonagh Group Limited

1) As disclosed in the press release “Acquisition of Minority Equity Interest in The Ardonagh Group” on 21st May 2019. Look-through shareholding as defined in the Shareholders’ Agreement

Shareholding % Dec'18 Current HPS 52% 54% MDP 33% 43% Other Shareholders (incl. KKR and Bain) 15% 3% Total 100% 100%

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This investor presentation contains non-IFRS measures and ratios, including Adjusted EBITDA and Pro Forma Adjusted EBITDA, that are not required by, or presented in accordance with, IFRS. Non-IFRS measures are defined by us as set out below. “EBITDA” defined as earnings after adding back finance costs (including from 1 January 2019 effective interest on lease liabilities), tax, depreciation (including with effect from 1 January 2019, depreciation of lease right-of-use assets), amortisation, impairment of non-financial assets, profit/loss on disposal of non-financial assets (except for right-of- use assets in the year of transition to IFRS 16), foreign exchange movements and dividends received. “Adjusted EBITDA” or “Adj. EBITDA" defined as EBITDA after adding back discontinued operations, restructuring costs, Transformational Hires, Business Transformation Costs, Legacy Costs and Other Costs, regulatory costs, acquisition and financing costs, profit/loss on disposal of businesses or investments, share of operating profit/loss from associate, reduction/increase in the value of contingent consideration, as applicable. Adjusted EBITDA is stated before exceptional costs and one-off items as determined by management. “Pro Forma Adjusted EBITDA” or “Pro Forma Adj. EBITDA” defined as the Adjusted EBITDA of the business as adjusted for certain cost saving initiatives and cost synergies. “Pro Forma for Completed Transactions” defined as meaning adjusted to: (a) include the results of new acquisitions from the first day of the comparative year, (b) remove the results and gain or loss on disposal of discontinued operations, and of other business disposals from the current and prior year, where they have occurred prior to the end of the reporting period, and (c) reflect financing transactions as if they had occurred on the first day of the prior year. “Adj. EBITDA Margin” defined as Adjusted EBITDA divided by total income. “Organic” defined as excluding the impact of acquired or exited businesses and other non-recurring items and is set out at constant FX. “LTM” defined as the arithmetical sum of the last twelve months results, it should be noted that the 2017 results have not been restated for IFRS accounting standard changes. “Transformational Hires” defined as net losses associated with new joiners hired to drive transformational business growth in the Insurance Broking, Specialty & International

  • r MGA segments to whom a capacity restriction (no insurer to underwrite policies) or restrictive covenant applies. The net losses are calculated as the recruitment costs, sign
  • n fees, costs of retention and salary (‘salary related costs’) incurred during the period of the capacity restriction or covenant, or during one year after the capacity restriction
  • r covenant has ended, less the income generated by those new joiners during that period. (If the net losses become negative, so that income generated exceeds salary-

related costs, this is no longer a Management Reconciling Item). “Business Transformation Costs” defined as costs (other than restructuring costs) incurred in transforming the legacy Towergate business, in realising synergy benefits from acquired businesses by reorganising management and business structures and by implementing new systems and processes, in reorganising group structures, in transforming business processes, in terminating contractual arrangements, and in driving a cost base that is the right size for the Group. “Legacy and Other Costs” defined as pre-2016 or non-repeatable costs arising from retention payments to key staff so as to provide long-term stability to the business, from insurer loss ratio performance for legacy underwriting disciplines and decision making, from external reviews and process improvements in cash and liquidity reporting, from write down of legacy IBA balances, from remediation work in the Finance function, and from commercial disputes.

Non-IFRS Financial Measures

Glossary

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“Operating Cash Conversion” defined as Adjusted EBITDA less working capital movement and maintenance capital expenditure, over Adjusted EBITDA. This excludes one-off costs, other capital expenditure and exceptional costs related to cost saving and income growth initiatives. “Free Cash Flow” defined as cash flow after proceeds from disposals, investments and interest, but before ETV costs, M&A and other financing cash flows. “Available Cash” defined as total unrestricted own funds plus ETV restricted funds. “Available Liquidity” defined as Available Cash plus Available RCF. “Available RCF” defined as available and undrawn RCF (Revolving Credit Facility).

Non-IFRS Financial Measures (cont’d)

Glossary