David Howden acquired an entrepreneur’s ability to navigate major setbacks early in life. Having broken his back at the age of 17 playing rugby, “I decided not to go to university. There was no point if I couldn’t play sport”. Instead he started working for the family insurance firm, specialising in professional cover against being sued by clients for the likes of lawyers or accountants.
Two years after the City’s Big Bang in 1986 the firm was sold to a larger American rival. “At that time the Americans were taking over the city. All the British firms were being bought up.” Keen to start his own business but lacking the cash, Howden entered into a joint venture selling professional indemnity (PI) insurance to independent financial advisers (IFAs). It went well, but when his larger partner decided to sell up in 1992, Howden found himself jobless.
Fortunately, the sale left Howden with the cash to start a new firm, so in 1994 he started Howden Pangborn with some help from private equity firm BP Marsh. With just six employees and a dog – “after a divorce, my first wife left me the dog” – he operated out of a small rented office in the City.
At first he stuck to providing cover for IFAs. But he already knew he wanted to expand into wholesale broking – getting a range of policies from an underwriter and selling them on to insurance firms who, in turn, sell to retail clients.
The problem was how to win big contracts in London. “Had we gone to the big guys they’d have said, ‘Who the hell are you?’” So Howden decided to look for business abroad. “A lot of the new types of PI insurance were either coming from America, because they’re litigious, or London, which has a long tradition of insurance. Our plan was to take these new types of insurance and sell them in other countries.”
The first market Howden tried to crack was Spain. Lacking the money to set up and staff a Spanish office, he sought out a local partner. “One of the biggest costs in insurance is hiring the right people. We got around that by offering partners shares in the company.”
As the Spanish business grew, Howden looked for partners in Colombia and Argentina. “Globalisation meant that more firms in these countries were having to consider the impact of new regulations and laws.” Howden ensured his firm offered the latest types of cover.
“We started with PI, then a few years later we started selling more directors and officers liability insurance.” As technology boomed in the 1990s the firm began selling ‘cyber-liability’ insurance, while a wave of stockmarket listings opened up sales of initial public offering insurance.
In 1998, with a turnover at £7m, Howden decided to launch a new business, Dual, an underwriting agency that has deeper and more direct advisory links with insurers. For example, it helps them win business in countries where they don’t have a presence or specialist knowledge.
He placed both firms, Howden Pangborn and Dual, into a new holding company, Hyperion Group. The beefed-up outfit eventually caught the eye of private equity firm 3i, which bought a 27% stake in 2008. The extra capital has helped to fund massive expansion – last year sales hit £87m. Now Howden’s next target is Asia. “Emerging markets make up 20% of sales, but we’re aiming to make that 50%.”