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João Mendonça: Howden wants to acquire brokerage firms in Portugal

The 16th largest brokerage firm in the world wants to grow in Portugal. The general director João Mendonça explains the outlines of the major investment that will be made in the national market.

Howden is a global brokerage, ranked 16th in the world, with revenues of £777 million in 2020. The Portuguese operation was set up five years ago from Spain by Américo Oliveira, an insurance veteran who remains connected to Howden as a consultant and advisor. João Mendonça, an economist with complementary training in marketing, has been General Director for Portugal since September last year and has clear ideas for the growth of the Howden business in Portugal. He was interviewed by ECO.

What is Howden on a global scale?

It is a company based in the UK, named after David Howden, founder and Chairman. In addition to wholesale and retail Insurance and Reinsurance Brokerage, the group has 3 additional pillars: The international network (Howden One) which ensures the group’s presence in countries where we do not have our own operations, Dual, which is the largest Underwriting Agency in the world and HX, which is our data & analytics “arm”, very focused on supporting all types of statistical modelling.

The Portuguese operation is carried out from Spain. What is the effective presence in Portugal at the moment?

Howden has been based in Lisbon since September 2016 – we are celebrating 5 years of setting up there. We started the operation by setting up a Howden Iberia branch, but in practice, we operate in most aspects as a Portuguese company, with Portuguese staff, clients and partners. And we anticipate we will shortly become a Portuguese company.

Which areas do you prefer?

The base of installation is consolidated, with a small team (there are 10 of us) and a still reduced volume of business but very focused on complex risks where know-how is determinant. These are areas such as M&A (mergers & acquisitions), Cyber, Structured Financial Solutions. Our project, with my joining the company, is to scale up the operation, and to position Howden in Portugal at a level equivalent to what already exists in Spain and, inherently, given the relative size, what already exists in the Iberia.

Scaling up means growing, what are the plans for Portugal?

The growth vectors involve exploring organic growth through partnerships with brokers and agents where we can provide specialised know-how, especially in branches or sectors with complex risks (we already have partnerships with some relevant market operators). Exploring our capabilities in reinsurance and acting with clients with complex risks are also ways forward. And for acquisition…

Are you interested in acquisitions in Portugal?

Yes, but we are looking with interest at operations where our incorporation generates important externalities – we are not looking for acquisitions only looking at the volume of business.

The main insurers we work with are the Portuguese insurers and the foreign insurers based in Portugal. In terms of reinsurance and the specialty market, I would not say the same.”

What is the current turnover obtained in Portugal?

Although the operation contributes with locally placed deals, and with deals through the Group’s headquarters in London and Madrid, the turnover is still small compared to what we are looking for. We are the 4th Broker in Iberia and we continue to have ambition… In Portugal, we are working to achieve a similar representativeness.

Which insurers do you work with? Only Spanish or also Portuguese?

We are entirely in Portugal. The main insurers we work with are the Portuguese insurers and the foreign insurers based in Portugal. In terms of reinsurance and the specialty market, I would not say the same, given the reduced expression of our market in terms of offer.

What is the weight of reinsurance in the company’s activity?

It is large, and it is inherent to the type of business we started with: the distribution of products through partners including other brokers and agents, but also insurers. In this case, in spot operations of facultative reinsurance – for the coverage to the insurer of a specific and individualised operation – or in supporting the management of reinsurance treaties. I would say that the development of Capital Relief solutions and Rating preparation also fall within the definition of this area of activity, since they are mainly directed to insurers. This area is mostly developed by HX, which is the company within the group that supports us in the development of solutions based on Data & Analytics.

We don’t do partnerships in a massive way: we only do them – delivering a commitment and actively involving our team – if we have complete reciprocity. This is how it should always be.”

Are you interested in partnerships with other market players? What kind? Which businesses could be interesting in partnership?

We are interested in partnerships, we already do it in Portugal, with remarkable success, and we are looking for more. But as always, we do not do it in a massive way: we only do partnerships – delivering a commitment and actively involving our team – if we have complete reciprocity. This is how it should always be.

What kind of partners and partnerships matter?

For us it is interesting to create a customised product, for subsequent distribution by our partner – there you are: we give the technical product component, the partner gives the distribution and management. It is also interesting for us to participate in the construction of solutions for our partners’ clients – these may be specific risks, such as Liability, Withdrawal, Cyber, Bonds, Intellectual Property, Reputation… the list is endless…

The door is wide open to partners, so…

Of Howden Group’s turnover, which is close to €1 billion, around 25% is achieved in the US… entirely through partners.

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