Paul Cuff: This transaction provides a direct path to the group becoming a market-leading insurance consulting provider
XPS Pensions Group has entered into an agreement to acquire the entire issued share capital of Polaris Actuaries and Consultants.
XPS said the purchase of Polaris – a UK insurance consultancy business – would "materially accelerate the group's strategy of becoming a leading player in the fragmented UK insurance consulting market".
It said the acquisition is expected to complete on 28 February 2025 and Polaris would be integrated into its current insurance consulting team.
XPS said a cash consideration of £23.4m will be paid on completion (of which £9m is subject to certain rights of claw-back) and a further contingent cash consideration of up to £35m will be payable in three years contingent on achieving certain "stretching" business performance criteria.
The acquisition is being funded from the XPS Group's existing cash and available debt facilities.
XPS said, in the year ended 31 December 2024, Polaris generated revenue of £17.7m at approximately 25% normalised adjusted EBITDA margin. It said it expected the acquisition to be immediately earnings accretive.
XPS were advised by Deloitte on the transaction.
Polaris was established in 2015 with the strategy to provide insurance clients with actuarial and technical services, supporting them on complex financial, risk and regulatory projects.
Today, Polaris provides a range of services from large scale, multi-disciplined transformation programs to specialist project support for some of the UK's largest insurance companies.
XPS said its enlarged XPS Insurance Consulting team will be well positioned to deliver "meaningful and reoccurring revenue" within XPS – with a senior team of five partners, including the three Polaris partners, led by David Honour
It said the end addressable market is large, with UK insurers collectively spending well over £1bn per annum on external support in maintaining and growing their businesses.
XPS Pensions Group co-chief executive Paul Cuff said: "We are delighted to have the Polaris team join us, via this attractive strategic acquisition for XPS. We have highly complementary skills and together we can provide the full range of services that insurers need as they address opportunities and challenges in their own thriving market. This transaction provides a direct path to the group becoming a market-leading insurance consulting provider. It is also brilliant for our people, as in time it will broaden the range of career paths available to them as we become a broader financial services advisory firm.
"The strong existing relationships we have with Polaris are important, with our head of insurance consulting David Honour having known the partners of Polaris for many years after working with them in prior roles. We think this transaction is an excellent fit and unlocks opportunity for everyone involved."
Polaris partner and founder Roger Houlihan added: "On behalf of the Polaris partners, employees and contractors, I am delighted to join the XPS team, a move that will allow us to build on the success we have achieved while expanding our capabilities. I am extremely proud of the business we have built and am excited about the future. We are looking forward to expanding the scale of our operations as we continue to work with our clients to provide a truly market-leading service offering. This is a big opportunity for the Polaris team and XPS, with the backing and expertise of a larger organisation we are looking forward to providing a more comprehensive service offering to our newly combined client base.
"Importantly, the core values and approach that has made Polaris successful will remain unchanged, our values closely align to XPS's enabling us to continue to deliver exceptional results for our customers and provide exciting opportunities for our team."
