Insurance broker Arachas up for sale at €25m as market sees hikes

ONE of Ireland’s largest non-life insurance brokers is up for sale, the Sunday Independent has learned.

Arachas Insurance has hired AIB Corporate Finance to explore a potential sale of the business.

A document circulated to potential buyers says the company’s shareholders decided to explore their options after a number of unsolicited approaches.

The business has offices in Dublin, Cork and Waterford and was set up in 2004.

The document tells potential buyers that the Irish insurance market is seeing big premium hikes and that this underpins a positive outlook for commission-based insurance brokerage income. It says the Irish economy is recovering from recession, providing a good macro backdrop, and that the company has identified opportunities to grow its position in the Irish market.

Industry sources said the company was looking to fetch €25m and that potential trade buyers could include brokers Willis Towers Watson, JLT (which has recently demonstrated an appetite for purchases) and Marsh. A purchase by any of those three would make the buyer the largest independent commercial non-life broker in Ireland.

The document puts Arachas as the fifth-largest commercial non-life broker in Ireland behind those three and Aon, citing 2015 Finaccord figures and management estimates.

The sources also said there could be private equity interest from the likes of MML Capital Partners Ireland or Carlyle Cardinal Ireland.

AIB Corporate Finance declined to comment and Arachas did not respond to a request for comment.

Arachas posted a 9pc jump in turnover last year taking in €15.1m. Pre-tax profit was €1.05m, up from €667,000 in 2014. Its name is the Irish word for insurance.

“Competition within the industry remained strong and the group is constantly developing new products in order to evolve and expand its share of the market,” the accounts state.

“The directors are committed to the future growth and development of the group and are confident that such growth can be delivered through a continued emphasis on customers, cost and margin controls, market share enhancement and people.”

Earlier this week the Oireachtas Finance Committee accused Central Bank regulators of abandoning drivers hit with massive premium hikes.

“It would appear, to the committee, that the Central Bank has abrogated responsibility for protecting consumers by claiming European law prevents it from getting involved in pricing and risk,” a Finance Committee report said.

“Thus, it is the opinion of the committee that the consumer has been thrown to the wolves.”

In a report that included 71 recommendations, the Oireachtas committee said drivers should be given more information on why premiums are rising.

Committee chairman John McGuinness said the hikes in motor cover were not justified.