For Gallagher’s Ronan Foley, all M&A plans are coming together as insurance brokers consolidate

Staff are confused as they enter the Dublin offices of insurance broker First Ireland – where exactly is new boss Ronan Foley?

In January, First Ireland was acquired by S&P 500-listed insurance brokerage giant Gallagher.

Foley, who became CEO of Gallagher’s Irish office when Gallagher acquired its Innovu business last year, played a significant role in the deal – but he doesn’t have his own office yet.

Currently set up in a top-floor meeting room overlooking the River Liffey, Foley says he’s looking forward to settling into his new surroundings – and having his own office.

Foley (55) has a long history with First Ireland, dating back to his early days in the insurance sector a few decades ago.

“I’ve known this business for a long time,” he says. “I used to come here as a junior salesman and sell them home and car insurance.

“The management team here is so strong and has a great reputation in the market. You have strong business acumen and a very strong retail business.

“All of these occasions are about the people. So when I met with the chair and the wider team, there was an instant connection.”

For Foley, it’s not just about reflecting on the past. The Dublin native has big plans for Gallagher – and the acquisition of First Ireland is just the start.

“This gave us a great opportunity to effectively double the size of the company overnight,” he says. “It was a significant development for Gallagher in Ireland.”

Foley hopes to grow Gallagher – which is one of the largest brokers in the world – into Ireland’s third largest broker by the end of the year. This would require a premium volume of around €250m. In Ireland it is currently €140 million, with 80,000 customers and 275 employees.

Ireland’s brokerage network of around 1,200 firms has gone through a period of rapid consolidation in recent years.

Gallagher and other retail and private equity-backed players – including the likes of PIB Group, Arachas and Aston Lark – have systematically set about acquiring smaller Irish companies to expand their geographic and sectoral footprint.

Deals with small brokers have become common, and almost every month news of new acquisitions make the headlines.

Arthur J. Gallagher has established itself in Ireland after acquiring Foley’s private equity-backed broker Innovu last June. Innovu itself had expanded in the same way, acquiring several brokers including Sheridan and PE Kelly Insurances.

Gallagher bought Wexford-based Doyle Mahon Insurances last November – and his appetite for deals has not yet been satiated. It’s exclusive to three other acquisitions that Foley expects to close this year.

As soon as these are done, he expects a break – before he starts again in 2024.

Foley is evidently a veteran of insurance broker mergers and acquisitions. So what’s driving the deals?

“If you look at the Irish brokerage model, there are a lot of brokers here,” says Foley. “Britain has undergone massive consolidation in this area and the next best obvious market was Ireland, which was untouched until a couple of years ago.”

Foley believes the sector will see more M&A activity over the next 18 to 24 months.

“Maybe a little longer,” he says. “It’s going to start to back off a bit in terms of deal frequency, but there’s still a long way to go.”

As the major players scramble for acquisitions, the competition for a deal across the line is heating up quickly. As a result, valuations are at their highest in about four years, Foley says.

Referring to the First Ireland deal, he says competition has been tough.

“It was a competitive process, but it was really fun,” he says. “There are very few big deals left in the country. In Dublin, which is already nationwide, many eyes were drawn to this gem.”

What does increasing consolidation in the brokerage sector mean for consumers? While there are likely to be fewer brokers, Foley believes consumers will benefit from more choice, not less.

“It works the other way around,” he says. “Compared to a smaller broker, being part of a larger broker gives you access to more competitive rates, a choice of policies and more capacity – in terms of accessing new products on an international basis.

“Even if you have risks abroad or live with risks here abroad, we can offer you all of that. It expands that offering and makes it more competitive for customers – they should see better coverage and competitive pricing.”

Foley grew up on the North Strand in Dublin. His father ran several Madigan Group pubs and hotels and also helped set up the Sands Hotel in Portmarnock.

At the school in North Dublin, the author Roddy Doyle was his English and geography teacher.

“Being tutored by Roddy was amazing – he was in the middle of writing obligations at that time. A lot of it was based on the people he knew in the area. I’ve stayed in touch with him over the years.”

Foley began his career in insurance around 1985 after his sister helped him get into AA. He sold international licenses that first summer.

After getting a taste for the sale, he offered to work for AA’s insurance division for free.

“I went to the attic, which had no windows, and this room was full of files everywhere. I worked up there for three months for nothing. Then I was offered a job in sales.”

Foley rose through the ranks at AA before embarking on a varied career in insurance.

Over the years, Foley has climbed the career ladder in Ireland.

He moved to the UK around 2004 to help Chubb Insurance restructure its business in the South East of England.

“I hopped on a plane with our six-month-old and moved here with the whole family for almost four years,” he says. “We had the best time over there.”

Returning to Ireland he took the next step up and became Managing Director of Ecclesiastical Insurance Group in Ireland in 2011 and then CEO of IPB Insurance. He later also became Chairman of The Ireland Funds.

In 2018, Foley made his ‘big step’ – leaving the corporate world and founding Innovu with the backing of private equity firm MML Growth Capital Partners Ireland.

“In MML I have gained a really strong Irish based partner. That was exciting – and a risk. Away from the company, where it is stable and safe, and then the decision to do something else.

“I’m glad I had the courage – and the support of my wife. It was a big decision, but it was the best thing I’ve ever done.”

MML took a significant stake in Wexford-based Sheridan Insurances, one of Ireland’s largest insurance brokers. Foley joined as CEO and Innovu was born.

Innovu grew rapidly, acquiring various companies and developing a solid presence in the South East of Ireland. When it acquired PE Kelly Insurances in October 2021, it had gross written premiums of around €67 million. Innovu’s 2021 results show the company posted a profit of nearly €1.65 million for the year.

Because the private equity model meant that MML would always try to redeem its chips after a few years, Innovu attracted interest.

Foley thought Innovu would be sold to another private equity firm and there was strong interest from that sector. But trade was strong too – and Gallagher was the one he and MML liked best.

“They were competitive and ready to move fast. We felt there was a bright future with the third largest broker in the world.”

Innovu was sold to Gallagher last June, with Foley saying MML was happy with the deal.

“It was a plan perfectly executed.”

Now at Gallagher, Foley has been working hard on his growth plan. Acquisitions are a quick way to gain scale, but Foley highlights organic growth as even more important.

“We’re a broker built on sales and customer service – that’s high on the agenda. If we don’t grow, we haven’t earned our license to acquire.

“We grew 8 per cent in Ireland last year excluding acquisitions. Acquisitions quickly give you the scale that is attractive in terms of size and expertise. That can help you grow better organically.”

He outlines the challenges brokers face. Private sectors such as household and motor vehicles will come under pressure from direct underwriters.

“The broker community needs to come up with better models and options for clients to compete with direct underwriters. That’s what we intend to do.”

According to Foley, housing inflation will inevitably cause commercial and residential home insurance prices to rise. However, his biggest concern is underinsurance, and he worries that rising costs will mean businesses and homes are not getting adequate insurance.

“We take a lot of time to ensure that the sums insured are sufficient and that people are properly insured – that is a crucial factor.”

Foley wants to leverage Gallagher’s expertise to find “key niches” such as: B. Marine, aviation and wealthy personal insurance.

He believes there is keen interest from Gallagher in expanding his Irish business. Having effectively doubled in size over the past six months, he now wants to compete at the highest level.

“We want to be number one in the next five years,” he says. “There is massive support from the team across the pond in the UK and from Pat Gallagher himself in the US.

“They are so excited about what we’re doing in Ireland,” he adds. “It’s great to have this challenge at this stage of my career and to be so energized for the future.”

CV