Worth the risk: Ireland’s risk management sector is proving an attractive investment

Ireland’s risk management sector received a welcome boost earlier this month when it was announced that Ardonagh Group, the UK’s biggest independent insurance broker, will open the Ardonagh Global Data and Risk Management Centre imminently in Mullingar, creating 60 new highly skilled data science and analysis roles.

The Data and Risk Management Centre will deliver data-driven insights to Ardonagh’s clients worldwide, providing a range of financial services-related products and services. The centre is expected to drive innovation in the global financial services market and make the Westmeath area one of the key Risk R&D regions in Europe.

Minister of State at the Department of Trade Enterprise & Employment, Robert Troy TD, welcomed the news, adding that he was pleased to see a focus on retaining talent in the region: “By working with the Athlone Institute of Technology, graduates will have greater options to live and work in the Midlands. While we have had a difficult 18 months, today’s significant announcement is a testament to the quality of talent and opportunities for companies investing in the Midlands.”

This demonstrated that Ireland continues to be attractive to international risk management businesses, coming just two months after LogicManager, a US-based risk management software company, announced that it has established its Europe, Middle East and Africa headquarters in Dublin. [www.idaireland.com/newsroom/logicmanager-establishes-emea-headquarters-in-dubl] The move is expected to create at least 30 new jobs over the next three years.

While the company has had an international client base for many years, the move is LogicManager’s first full expansion into Europe. LogicManager’s management chose Dublin due to its membership of the European Union and single market, as well as the availability of a highly educated workforce.

“Dublin was a destination that caught our eye from the very beginning,” said Steven Minsky, CEO of LogicManager. “The depth of talent, its emergence as a global tech hub as well as Ireland’s strong position on data privacy – something of key importance to us and our customers – is what particularly attracted us to the location.”

Why Ireland is so attractive for risk management businesses

Minsky’s comments neatly summarise some of the key reasons why Ireland is viewed so positively by international risk management businesses. Ireland has been regarded as a global tech hub for some years and its infrastructure is therefore highly developed.

It also means there are many complimentary businesses in the country, from software providers to cybersecurity companies. Ireland is considered a European leader in many of these sectors, with global players to start-ups playing a part.

There is also a large pool of highly qualified talent in Ireland, with many young people leaving university with tech-related degrees and including specifically in risk management. Also, many universities engage with their local business community to help with research and development of new and often innovative products and solutions.

Ireland’s membership of the EU is also important, especially given that the country is the only native English-speaking nation in the 27-country bloc and that it is a member of the single market, giving it frictionless trade with the other member states.

As the ramifications of Brexit become clearer – and the difficulties with trading with EU nations that it is causing for UK businesses – Ireland is becoming an increasingly desirable destination for UK businesses that want to trade with the EU without having the hassle of third-party regulations or learning another language.

There is also plenty of government backing for risk management businesses. For example, the moves by Ardonagh and LogicManager have both been supported by IDA Ireland (www.idaireland.com), the government’s foreign direct investment agency.

Acquisitions

With the sector reaching a level of maturity, acquisitions have been plentiful in the sector in the past year. For instance, in February, US risk management firm AcadiaSoft snapped up Dublin-based risk consulting and software firm Quaternion.

The deal, financial terms of which were not disclosed, adds “significant depth” to AcadiaSoft’s risk product offerings, according to the company.

The two companies have worked closely together for several years – they have had a strategic relationship in place since 2018 – so a formal acquisition made sense. AcadiaSoft CEO Chris Walsh said: “Bringing these capabilities in-house will allow us to develop best-in-class products to optimise and centralise risk management.”

Following the deal, Quaternion has become a division of AcadiaSoft, but remains led by its co-founders, CEO Donal Gallagher and CTO Roland Lichters.

Meanwhile, Aston Lark, which is majority owned by Goldman Sachs Merchant Banking Division, has been on a major M&A drive over the past year and has completed numerous deals in Ireland and the UK, including the acquisition of North County Brokers in March. [www.astonlark.com/news-and-views/aston-lark-announces-acquisition-of-north-county-brokers/]

The financial terms of the deal to acquire Balbriggan-based North County Brokers, which provides independent advice across a range of insurance and risk management services, were not disclosed.

North County Brokers specialises in advising businesses sectors including manufacturing, technology, communications, import, distribution and the motor trade.

At the time of the deal, North County Brokers managing director John Horan said the company was looking forward to growing and developing the business: “We feel we share many traits and synergies with the Aston Lark Group and are excited to expand our potential into the future.”

Following the deal, the company has been rebranded Aston Lark Ireland. This is part of London-based Aston Lark’s wider strategy to become the largest independent insurance broker in Ireland.

Future prospects

Risk management is set to become increasingly important in the years to come for businesses in Ireland and around the world. The global pandemic demonstrated the need for businesses in every sector to plan for every eventuality. Indeed, for many businesses now, especially larger ones, risk management is part of the core planning process, considering everything from reputational to regulatory risk and anything in-between to ensure that business decisions are made with as much information as possible behind it.

The risk management sector is also continuing to evolve, with innovations such as artificial intelligence set to provide the next step forward and provide even richer data for analysis and solutions for mitigating risk.

The state of the sector also means there are likely to be opportunities to acquire, or invest in, an Irish risk management business in the years to come. Many of Ireland’s risk management businesses are growing, which means some will seek additional funds to continue the development of their products or to expand domestically or internationally or look to sell out to larger rivals to achieve their expansion ambitions.

As the above examples show, Irish businesses are already proving attractive internationally as others seek to acquire a presence in Ireland or set up a new operation there. Given Ireland’s prowess in this and other related sectors, there are no indications that this is likely to slow down in the short- to medium-term.

Advice

With the potential for growth in the sector going forward, there should be plenty of chances to invest in or acquire Irish risk management businesses. For those looking to invest in or acquire a risk management services provider or establish a new business in Ireland, then it is crucial to get the right advice – especially in regard to things like the tax regime.

Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset. Remember, while Ireland may share a land border with the UK, the regulatory regimes can be quite different, which can trip up unwary investors.