Australian broker Steadfast acquires HW Wood for £23.5mn

Australian broker Steadfast Group has acquired Lloyd’s broker HW Wood Limited and HWI France for a purchase price of £23.5mn ($30.35mn).

The transaction — which is expected to settle on 2 December 2024 — is forecast to be earnings-per-share-accretive from the date of acquisition before synergies.

Steadfast said the acquisition would be funded through its existing corporate debt facilities and free cash flow.

Lloyd’s broker HW Wood was founded in 1982 and is focused on wholesale, retail and reinsurance in areas including international marine and cargo, property, fine art and specie.

The acquisition is also understood to include HW Wood’s Greece operations, as well as the disclosed UK and French operations, sources said.

This is the second major sale by HW International BV after it sold its US and Canadian operating entities to specialty insurance brokerage Risk Strategies in March 2024.

Filings with UK Companies House show HW Wood Limited generated turnover of £13.34mn for the year ended 31 December 2023, up from £9.7mn in the prior year. Operating profit was £314,455, while post-tax profit was £220,704.

In addition, HW Wood had shareholders’ funds of £2.57mn at the full year 2023, consisting of £500,000 of called-up share capital and £2.07mn in its profit and loss account.

HW Wood will continue to be led by managing director Steve Ruddock, while the Steadfast Placements team will integrate into the new entity.

Steadfast said the expansion into London will support its management of London-based binders, which it said will be brought in house over the next two years rather than outsourced.

It is understood that HW Wood was advised by West Hill Corporate Finance Limited on the transaction.

The sale follows HW Wood’s disclosure in November 2023 that it would be unable to pay more than $22mn in fines imposed by the US Department of Justice (DoJ) after it admitted to participating in a scheme to bribe Ecuadorian government officials.

The DoJ fined the privately owned intermediary alongside broker Tysers after it found that the two firms had paid bribes totalling $2.8mn to Ecuadorean officials to secure reinsurance business from state-owned insurance companies.

HW Wood agreed to a penalty of $22.5mn, plus a $2.3mn forfeiture, but this was slashed to $508,000 after the company’s financial situation revealed an “inability to pay the penalty”, the DoJ said.

HW Wood was formerly controlled by Netherlands-based HW International BV, which itself was ultimately owned by the Bermuda-based Bayfield Trust.

Steadfast has also been involved in its own controversy in recent months.

In September, Steadfast was forced to conduct a review into “inappropriate behaviour” after reports said one of its brokers channelled work to a related entity when cheaper insurance was available.

The Australian broker has rejected allegations it misled customers and denied that financial arrangements between insurance companies, brokers and strata managers were driving up insurance costs.