Miller: Eight years’ growth in three

Cinven teamed up with GIC, a leading global investor, to invest 50/50 in London-based Miller Group in 2021. Cinven’s stake was held by its then newly founded Strategic Financials Fund (SFF), a fund created to hold investments for longer to compound significant value over time. Miller was the SSF’s first investment.

“The fund’s remit is to make around six investments in businesses that are stable, with good revenue visibility, strong cash conversion and that are downside protected, holding them for up to seven or eight years,” explains Luigi Sbrozzi, Cinven partner.

The Miller deal, largely negotiated during the second half of 2020, was completed in 2021. At that time, many rival private equity firms were more focused on their existing portfolios, trying to work out how the Covid pandemic that began at the end of 2019, was going to affect their investments. Cinven’s financial services team, however, had built up substantial knowledge and understanding of the insurance sector thanks to previous investments in Britain’s Guardian Financial Services and German life-insurance consolidation platform Viridium Group. Along with its research into other potential acquisitions, this had provided what Sbrozzi calls “conviction” about the sector.

Miller was a non-core subsidiary of Anglo-American insurance services group Willis Towers Watson (WTW). As the parent prepared to merge with US professional services group Aon, Miller was put up for sale.

The next step was to maximize Miller’s growth. Total revenues increased a 26% on 2022, the group EBITDA increased 31% with a Total Gross Written Premium (GWP) placed of c. £3 billion (c. $4 billion), with more than 4,500 clients globally. The buyer was Cinven’s co-investor GIC for an undisclosed sum.

Incentives to build

This extraordinary growth was achieved by focusing on three strategies: attracting talented new managers and brokers; extending its brokerage offering worldwide; and harnessing data and technology to better serve clients.

Established in 1902, Miller had a long history and good reputation. By 2021, it employed some 640 people working across sectors including marine, energy, credit and political risks, property, sports and entertainment. But growth was constrained by the challenge of recruiting the talent it needed.

The solution proposed by Cinven and GIC was to improve Miller’s discretionary compensation to entice brokers away from other platforms. “In a people-driven business like insurance, we suggested management use an incentive plan to allow the most important producers to participate in the value they were going to create,” says Juan Monge, Cinven partner. “It enticed good people away from larger brokers that didn’t have these types of performance incentives.”

The co-investors also strengthened the management team, helping to find a new chairman, chief executive, chief finance officer, chief operating officer and chief investment officer, as well as the heads of M&A, Asia, Europe and re-insurance to expand Miller’s reach beyond the UK.

Funds to buy

“We knew that growth could come from overseas. To tap into that, Miller needed to build out its international presence and so we helped build up the M&A team. We also sat on the investment board, helped triage possible targets and provided capital, but the merit is theirs for sourcing the targets through their network,” says Monge.

Acquisitions included a marine insurer in Japan and a sports insurer in France. Both expanded Miller’s global footprint, offering strategic growth opportunities.

Further growth came from setting up a new managing general agent offering specialist underwriting capabilities that complemented the brokerage side. Meanwhile, a new Salesforce platform gave a much clearer picture of clients’ behaviour, enabling the sales teams to be much more effective when interacting with clients and insurers.

Realisation

In the background, Cinven and GIC were making sure the industry was aware of Miller’s transformation and scoping its reaction to Miller’s performance. “As a deal team, we socialise the businesses we’ve just bought. It’s very accretive because it generates a lot of interest,” says Monge.

By the end of 2023, with EBITDA almost doubled and the headcount up to 900, it was clear Miller was hitting the investors’ eight-year targets just three years into ownership. This triggered a review of next steps and produced a five-year plan for Miller setting out the future direction and investments.

“At this stage, not only did we realise we had a bunch of motivated buyers and first-class sale material in the five-year plan, but also a management team and brokers keen to realise the value they had created,” Monge explains.

This keenness had been fuelled by competing platforms going through their own liquidity events – where money is returned to the producer, crystalising their incentives. Given Miller’s outperformance, it was important to reward the producers. By triggering an exit, the team would lock in their monetary value, while management and the new owners would be able to commit to the next growth stage.

Despite external interest, in the end it was our investment partner GIC that stepped in to buy SFF’s stake, enabling it to realise the fund’s first exit.