QUARTER 1 2020 RESULTS 20 May 2020 Disclaimer This presentation - - PowerPoint PPT Presentation

QUARTER 1 2020 RESULTS

20 May 2020

2

Disclaimer

Note: Adj. EBITDA includes benefit from IFRS 16 implementation in 2019 throughout this document unless otherwise stated This presentation (the “Presentation”) has been prepared by The Ardonagh Group Limited (“Ardonagh” or the “Group”) and is its sole responsibility. For the purposes hereof, the Presentation shall mean and include the slides that follow, any oral presentation by Ardonagh or any person on its behalf, any question-and-answer session that may follow the oral presentation, and any materials distributed at, or in connection with any

• f the above.

The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is or will be made by any person as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information or opinions expressed in the Presentation. No responsibility or liability other than that implied by law is or will be accepted by Ardonagh, its shareholders, subsidiaries or affiliates or by any of their respective officers, Directors, employees or agents for any loss howsoever arising, directly or indirectly, from any use of the Presentation or its contents or attendance at any presentation or the question-and-answer session in relation to or in connection with this document. Ardonagh cautions that the Presentation may contain forward looking statements in relation to certain of Ardonagh’s business, plans and current goals and expectations, including, but not limited to, its future financial condition, performance and results. These forward looking statements may be identified by the use of forward looking terminology, including the words “aims”, “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, “plans”, “predicts”, “assumes”, “shall”, “continue” or “should” or, in each case, their negative or other variations or comparable terminology or by discussions of strategies, plans,

• bjectives, targets, goals, future events or intentions. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond

Ardonagh’s control, including but not limited to insurance pricing, interest and exchange rates, inflation, competition and market structure, acquisitions and disposals, and regulation, tax and other legislative changes in those jurisdictions in which Ardonagh, its subsidiaries and affiliates operate. As a result, Ardonagh’s actual future financial condition, performance and results of operations may differ materially from the plans, goals and expectations set out in any forward looking statement made by Ardonagh. All subsequent written or oral forward looking statements attributable to Ardonagh or to persons acting on its behalf should be interpreted as being qualified by the cautionary statements included herein. As a result, undue reliance should not be placed on these forward looking statements. The information and opinions contained in the Presentation have not been audited or necessarily prepared in accordance with international financial reporting standards and are subject to change without notice. The financial results in this document and the Presentation include certain financial measures and ratios, including EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Organic growth and certain other related measures that are not presented in accordance with IFRS and are unaudited. These measures may not be comparable to those of other companies. Reference to these non-IFRS financial measures should be considered in addition to IFRS financial measures, but should not be considered a substitute for results that are presented in accordance with IFRS. The information contained in the Presentation, including but not limited to any forward-looking statements, is provided as of the date hereof and is not intended to give any assurance as to future results. No person is under the obligation to update, complete, revise or keep current the information contained in the Presentation, whether as a result of new information, future events or results or otherwise. The information contained in the Presentation may be subject to change without notice and should not be relied on for any purpose. The Presentation is solely for informational purposes and does not constitute or form part of, and should not be construed as, an offer to sell or issue securities or otherwise constitute an invitation or inducement to any person to purchase, underwrite, subscribe to or otherwise acquire securities in Ardonagh or any of its subsidiaries nor does it constitute an invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000 (“FSMA”). The Presentation does not constitute an invitation to effect any transaction with Ardonagh or to make use of any services provided by Ardonagh. The distribution of the Presentation in certain jurisdictions may be restricted by law. Recipients of the Presentation should inform themselves about and observe such restrictions. Ardonagh disclaims any liability for the distribution of the Presentation by any of its recipients. This document is for distribution only in the United Kingdom and the Presentation is being made only in the United Kingdom to persons falling within Articles 19, 43, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended), to persons who have professional experience in matters relating to investments or to persons in the United Kingdom to whom this document may otherwise be lawfully distributed. This document is being supplied and the Presentation made to you solely in that capacity for your information. This document may not be reproduced, redistributed or passed on to any other person, nor may it be published in whole or in part, for any purpose. By accepting the Presentation, you agree and acknowledge (i) that the Presentation and its contents may contain proprietary information belonging to Ardonagh and (ii) to be bound by the foregoing limitations, undertakings and restrictions.

Business Overview: Q1 2020

4

1. Continued strong underlying organic income growth driven by continued improvement in retention, acceleration of income from recently hired producers and small “add-on” acquisitions

• Reported income growth +1.6% for the quarter vs. prior year
• +4.5% underlying organic income growth(1) with growth across all platforms

2. Rapid EBITDA expansion across all platforms and continued reduction in one-off costs

• +230bps improvement in Adj. EBITDA margin vs. prior year, as cost savings continue to be delivered
• +24% increase in Reported EBITDA which grew to 80% of Adj. EBITDA for the quarter

3. Continued robust improvement in Operating Cash Conversion with cash outflow in the quarter driven by income seasonality, timing of interest and bonus payments, ETV redress and M&A investments

• Operating cash conversion 61% for the quarter vs. 44% for prior year - LTM at 93% is an “all time high”
• 45% reduction in investment spend and legacy costs, contributing to +£19m improvement in free cashflow pre disposal

receipts vs. prior year - LTM broadly cash neutral

• £147.4m Available Liquidity at 31 March 2020, post annual bonus payments for 2019 and semi-annual interest

Q1’20 At a Glance Business Overview

Continued strong growth in income and margins, underpinned by business resilience as the result of our diversification and investment in infrastructure

1) Underlying organic income growth Q1'20 vs. Q1'19 adjusting for COVID-19 estimated income impact and excluding Swinton; excluding COVID-19 adjustment and excluding Swinton, organic income growth was +3.5% Q1’20 vs. Q1’19

5

Ardonagh Total Income LTM (£m) 323.4 363.3 411.2 461.2 513.8 524.5 527.1 556.8 592.7 629.0 667.5 670.0 673.9 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q1'20 Pro Forma 21% 26%

• Adj. EBITDA Margin LTM (%)

21% 21% 21% 19%

(2)

Creation of

22 June 2017

1) Pro forma for all material acquisitions and cost savings from completed actions and actions expected to be completed during next 12 months

18% 18% 22% 32% Reported Income Reported Margins Q1’20 Pro Forma 24%

(1) (1)

Progress over Time Business Overview

27% 28%

Sustained income growth and margin expansion each quarter since Ardonagh was established, despite turbulent macro environment

6

Highly diversified, resilient earnings base across products, channels, carriers and customers, providing natural protection against impact of COVID-19

GWP by Carrier(1) GWP by Class of Business(1)

1) 2019 GWP pro forma for all material acquisitions and disposals

• Travel, leisure & hospitality sectors account for c. 3.5%

total Group income

• Only c. 1% of total income from oil & gas industries,

including both upstream and downstream activities

Business Diversity Business Overview

• c. 80% of capacity is placed directly with carriers,

remaining capacity is placed with other brokers/MGAs including with Ardonagh

• c. 95% of directly placed capacity is with carriers rated

A or above

7

Strong operating performance across all platforms

Platform Highlights Business Overview

Specialty Advisory Retail

✓ Very strong organic income growth, driven by prior year investments in new hires rapidly reaching maturity ✓ Growth in core specialist lines through high client retention and strong new business wins across the portfolio ✓ Income growth and successful delivery of cost saving plans delivering +410bps

• Adj. EBITDA margin improvement

✓ Acquired Rural Insurance Group, an Agriculture specialist MGA on 28th February, a highly complementary business to our existing Agriculture MGA, adding underwriting depth, capacity diversity and significant scale in an attractive market sector ✓ Underlying organic income growth +0.9% (excluding Swinton), driven by improved retention across all businesses ✓ Overall retention up +220bps ✓ Total policies under management remain stable at 3.3m, with product distribution further optimised across the Retail brands ✓ Successful delivery of cost saving programme, Swinton site closures and portfolio optimisation driving an overall +470bps Adj. EBITDA margin improvement in the quarter ✓ Reported income growth of +6.1% underpinned by "add-on" acquisitions and continued strong organic income growth across Insurance Broking, HAPS and Footman James businesses ✓ Strong income retention, up 70bps vs. Q1’19, driven by the continued focus on customer service and quality risk advice ✓ Insurance Broking awarded a gold Investor in Customers (IIC) rating for the 2020 survey, a marker of excellent customer service and colleague engagement

£55.7m +2.6% +£0.5m

Income

• Org. Gth(1)

EBITDA Gth(2)

£64.4m +0.9% +£1.7m

Income

• Org. Gth(1)

EBITDA Gth(2)

£39.0m +10.7% +£2.6m

Income

• Org. Gth(1)

EBITDA Gth(2)

1) Underlying organic income growth Q1’20 vs. Q1’19 adjusting for COVID-19 estimated income impact and excluding Swinton 2) Income and EBITDA (Adj. EBITDA) growth presented on reported basis

8

✓ "Add-on" acquisition of Rural, a specialist underwriter, completed on 28 Feb’20 – augments existing agriculture book in MGA ✓ Internal transfer of travel book and Swinton commercial from Retail to Advisory continues effort to re-align businesses to maximise value ✓ Two small, highly complementary "add-on" acquisitions in Advisory (£1.1m total) completed Feb/Apr’20 ✓ Continued buy-out of ARs in HAPS at favourable multiples ✓ Significant revenue opportunity to capitalise on our scale with risk markets ✓ Centralisation of placement through a dedicated team in APS ✓ Highly successful Terrorism facility launched 1 Jan 2020 ✓ Additional contract for £300k annual value signed in Q1 ✓ APS has quickly become a key partner for top insurers, providing valuable insight

Significant business growth momentum driven by historical investments in new transformational hires, APS and synergistic "add-on" M&A

Growth Drivers Business Overview

✓ Substantial further upside from Specialty producer hires already with the business as they rapidly reach revenue maturity ✓ Continued investment planned for further recruitment of producers ✓ 5 additional producers joined in Q1, complementing our regional strategy in Asia, Bermuda and London ✓ £1.7m income in Q1’20 from producers that joined in last 12 months ✓ Specialty organic growth of +10.7% in Q1’20 vs. prior year

Completed synergistic M&A “tuck-ins” Recently hired producers rapidly reaching maturity Highly accretive growth in APS

Financial Update: Q1 2020

10

Continued income growth and margin expansion despite macro uncertainties, driven by economies of scale and continued delivery of cost savings

1) Reported result includes acquisitions from the completion date 2) Pro forma all material acquisitions (incl. Rural completed on 28 Feb’20, £1.4m Adj. EBITDA in 2019) 3) Including £30.4m pro forma for annualised cost savings

Overview Financial Update

Reported Result Q1 Pro Forma Result Q1 Pro PF Adj. Variance Variance Forma(2) EBITDA(3) £m 2020 2019 £m % 2020 2019 £m % LTM Q1'20 LTM Q1'20 Income 160.1 157.6 2.5 1.6% 160.7 159.7 1.0 0.6% 673.9 Staff Expenses (77.2) (75.8) (1.5) (2.0%) (77.6) (77.0) (0.6) (0.8%) (314.7) Operating Expenses (39.2) (42.5) 3.2 7.6% (39.3) (42.9) 3.5 8.3% (170.4)

• Adj. EBITDA as Reported

43.6 39.3 4.3 10.9% 43.7 39.8 3.9 9.8% 188.8 219.2 Margin % 27.2% 25.0% 230 bps 27.2% 24.9% 230 bps 28.0% 32.5% Staff Costs as % of Income 48.3% 48.1% (20 bps) 48.3% 48.2% (10 bps) 46.7%

• Op. Expenses as % of Income

24.5% 27.0% +240 bps 24.5% 26.8% +240 bps 25.3%

(2) (1)

11

£667.5 £670.0 £673.9 £1.5 £1.2 £2.9 £3.9 (£3.2)

2019 Reported Acquisitions FX Swinton Growth LTM Q1'20 Reported Annualisation

• f Acquisitions

LTM Q1'20 Pro Forma

(1)

+0.4%

• vs. 2019

Reported +1.0%

• vs. 2019

Reported

(1) (2)

1) Reported result includes acquisitions from the completion date 2) Pro forma for all material acquisitions 3) Underlying organic income growth Q1'20 vs. Q1'19 adjusting for £1.5m COVID-19 estimated income impact and excluding Swinton; excluding COVID-19 adjustment and excluding Swinton,

• rganic income growth was +3.5% Q1’20 vs. Q1’19

Continued income growth despite planned remediation of Swinton

Income Bridge Financial Update

LTM Q1’20 vs. 2019 full year Income Bridge (£m)

Rural acquisition completed 28 Feb’20, plus 1 Month Nevada 3 +4.5% underlying organic income growth(3) more than offsetting COVID-19 income impact Rural acquisition completed 28 Feb’20 Swinton planned remediation as the result

• f portfolio optimisation

across Retail brands

12

£183.4 £187.7 £188.8 £219.2 £0.2 £0.2 £4.9 £1.1 £30.4 (£1.0)

2019 Reported Acquisitions FX / Accounting COVID-19 Impact Growth & Net Cost Savings LTM Q1'20 Reported Annualisation

• f Acquisitions

LTM Q1'20 Pro Forma Annualised Cost Savings and Synergies LTM Q1'20 Pro Forma

• Adj. EBITDA

+2.3%

• vs. 2019

Reported

(1)

+2.9%

• vs. 2019

Reported +19.5%

• vs. 2019

Reported

(1) (2) (3)

Strong growth in Adj. EBITDA as a result of continued delivery of cost savings

EBITDA Bridge Financial Update

LTM Q1’20 vs. 2019 full year Adj. EBITDA Bridge (£m)

Rural acquisition completed 28 Feb’20, plus 1 Month Nevada 3 £5.3m gross cost savings delivered in Q1’20, from actions executed/ planned in 2019 Organic growth offset by cost inflation and investment in growth initiatives Remainder of the £34.0m 2019 annualised cost savings and synergies (incl. Rural) 35% from actions already taken All cost actions planned in 2019 and unrelated to COVID-19

• Adj. EBITDA

1) Reported result includes acquisitions from the completion date 2) Pro forma for all material acquisitions 3) Includes annualisation of cost savings from completed actions and actions expected to be completed during next 12 months

Margin 27.5% Margin 28.0% Margin 32.5%

Rural acquisition excluding synergies

Margin 28.0%

COVID-19 income impact

• ffset by associated

expense reductions

13

20% 15% 74% 65% 80% 27%

£29.7m £122.1m £34.9m £110.3m £122.7m £143.1m £165.2m £183.4m £188.8m £43.6m 2018 LTM Q1'19 LTM Q2'19 LTM Q3'19 2019 LTM Q1'20 Q1'20 LTM Q1'20 Pro Forma for Completed Transactions Exceptionals excl. ETV, Financing and M&A Swinton Exceptionals ETV, Financing and M&A Reported EBITDA

Continued improvement in quality of earnings as cost savings are delivered and

• ne-time costs reduced - Reported EBITDA at 80% of Adj. EBITDA for the quarter

Quality of EBITDA Financial Update

• +71% increase in LTM Adj. EBITDA from £110.3m

in 2018 to £188.8m for LTM Q1’20

• +311% improvement in LTM Reported EBITDA

from £29.7m to £122.1m for LTM Q1’20

• Improvement in underlying reported EBITDA

driven by income growth and successful delivery

• f cost saving programmes, combined with

reduction in one-time costs to deliver savings as programmes terminate

• Reduction in Swinton exceptionals as integration

and branch closure programme are completed

• Exceptionals (excluding Swinton integration costs,

M&A, financing and ETV costs) represent only 20% of LTM Q1’20 Adj. EBITDA, a significant reduction vs. 74% in 2018

• For Q1’20 in isolation, Reported EBITDA is

£34.9m, 80% of Adj. EBITDA of £43.6m LTM Reported Adj. EBITDA(1) Commentary

1) Reported result includes acquisitions and disposals from the completion date; LTM Q1’20 includes pro forma for Rural

14

£34.0 £30.4 £1.8 (£5.3)

Q4'19 Pro Forma Adjustment Cost Savings Delivered in Q1'20 Additions from M&A Q1'20 Pro Forma Adjustment

Reduction of pro forma adjustments as an additional £5.3m cost savings are delivered into Reported EBITDA during the quarter

Pro Forma Adjustment for Future Benefits from Cost Savings and Synergies: (£m)

• Pro forma adjustment for annualisation of cost savings of

£34.0m as at Dec’19, reduced to £30.4m at Mar’20 as savings are delivered

• Additional cost synergies identified from integration of Rural

acquisition within our existing MGA business

• Excludes all savings related to COVID-19
• £5.3m additional cost savings delivered during Q1’20:

– Benefits from headcount savings implemented during 2019 as part of de-centralisation and rationalisation – Third-party IT support savings implemented in 2019 – Advisory operational efficiencies and synergies – Specialty operating structure and process efficiencies

• Total of £30.4m clearly identified near-term annualised

cost savings and cost synergies as at 31 Mar’20 – £10.7m of identified cost savings are the annualisation of benefits from completed actions as at 31 Mar’20 – Remaining £19.7m identified cost savings are the result

• f annualisation of benefits from actions expected to be

completed during the next 12 months

EBITDA Financial Update

15

£30.4m of cost reductions expected from clearly defined near-term actions unrelated to COVID-19, 35% savings already actioned

Cost Savings Financial Update

Cost Savings & Synergies – Actions Already Taken Cost Savings & Synergies – Planned Actions Total:

• Benefits from further business integration, management

and back office savings

£10.6m £19.7m

• Operational excellence programme focused on digital

transformation, reduced admin and back-office staff costs, central procurement savings and rationalisation of underperforming teams

• Cost synergies from integration of Rural acquisition

£2.2m

• Continued optimisation of cost base across the Retail
• perating segment – Autonet, Carole Nash, Swinton
• Annualisation of benefits from Swinton branch closures

and integration with Autonet

• Further benefits from integration of PSL and S&P retail

business with Autonet, Carole Nash and Swinton

£6.2m Specialty Advisory Retail

• Annualisation of benefits from Acturis implementation

(BSC), property rationalisation, business integrations and support function simplification

• Benefits from final completion of original Towergate

Transformation programme

£1.7m £2.5m £3.6m

• Annualisation and completion of support function

rationalisation in S&P

• Third party vendor savings in PSL
• Annualisation optimisation of cost base across the Retail
• perating segment
• Annualisation of cost savings from right-sizing the MGA

expense base following the Commercial MGA disposal

• Annualisation of Specialty cost savings from business-wide

efficiency programme

Corporate £2.9m

• Annualisation of staff savings across central support

functions and property footprint rationalisation

• Annualisation of benefits from final completion of original

Towergate Transformation programme

Total: £10.7m £0.7m

• Third party support cost savings

Annualisation of actions already taken: Annualisation of actions planned for next 12 months:

16

1) Free Cash Flow defined as cash flow after proceeds from disposals, investments and interest, but before ETV costs, M&A and other financing cash flows 2) Movement in Available Cash as set out on page 8 of Ardonagh Q1’20 Interim Report

• Operating cash conversion of 61% in Q1’20 significantly

improved on 44% in Q1’19. Annual bonuses paid in March and semi-annual interest paid in January, combined with seasonality of income typically results in Q1 lower cash generation than other quarters

• £6.8m of discretionary Business Transformation investment

and £2.9m discretionary Project Capex in Q1’20, made up of: – £8.3m invested in Ardonagh cost savings programmes, primarily IT consolidation and redundancy costs – £1.3m invested in Swinton, primarily redundancy

• 44% reduction in investment spend vs. prior year
• £3.6m legacy costs, primarily loss corridors and legacy tax

payments, 46% reduction vs. prior year

• £19.3m improvement in free cash flow pre disposals and

broadly neutral on LTM basis

• £28.7m discretionary M&A primarily relating to acquisition of

Rural on 28 Feb’20 (£23.5m) and continuation of AR buy-outs in Advisory

• £70m financing inflow from RCF drawdown
• ETV redress payments of £9.1m in Q1’20 (£25.0m paid to

date), with £38.5m provisioned for future payments

• Net cash outflow of £6.6m results in a closing Available Cash
• f £55.1m and, with £92.3m Available RCF as at 31 March’20,

a total Available Liquidity of £147.4m

Cash Financial Update

Operating cash conversion of 61% significantly improved vs. prior year, free cash flow +£19m vs. Q1’19 excluding disposals and LTM broadly neutral

Quarter 1 LTM £m 2020 2019 Var Q1'20 Adjusted EBITDA 43.6 39.3 4.3 187.7 Working Capital Movement (16.1) (21.4) 5.4 (10.8) Maintenance Capex (0.8) (0.6) (0.2) (2.6) Operating Cash Flow 26.7 17.3 9.4 174.3 Operating Cash Conversion 61% 44% 17% 93% Transformational Hires (0.7) (1.0) 0.4 (5.1) Project Capex (2.9) (2.7) (0.2) (16.0) Business Transformation (6.8) (14.7) 7.9 (33.4) Investment Spend (10.3) (18.5) 8.1 (54.5) Legacy Costs and Other Costs (3.6) (6.8) 3.2 (14.7) Lease Payments (2.9) (4.6) 1.7 (12.3) Interest on Notes and RCF (46.9) (43.8) (3.1) (93.7) Free Cash Flow pre Disposals (37.1) (56.4) 19.3 (0.9) Disposals

• 26.7

(26.7) (0.3) Free Cash Flow pre ETV, Equity, M&A(1) (37.1) (29.7) (7.4) (1.2) M&A, Equity, Debt Purchase (28.7) (3.4) (25.3) (67.1) Financing and Associated Costs 69.5 (3.2) 72.7 65.1 Regulatory (incl. ETV redress) (10.3) (0.6) (9.8) (30.4) Net Cash Flow(2) (6.6) (36.8) 30.2 (33.6) Opening Available Cash 61.7 125.6 (63.9) 88.7 Closing Available Cash 55.1 88.7 (33.6) 55.1

17

• Excl. IFRS 16 Impact
• Incl. IFRS 16

£m Mar'19 Dec'19 Mar'20 Mar'20 Available Cash(1) 88.7 61.7 55.1 55.1 SSRCF

• 70.0

70.0 GBP Senior Secured Notes 553.3 553.3 553.3 553.3 USD Senior Secured Notes(2) 589.2 589.2 589.2 589.2 Net Secured Debt 1,053.7 1,080.7 1,157.4 1,157.4 Other Debt 4.7

• Lease Liabilities
• 45.6

Total Net Debt 1,058.4 1,080.7 1,157.4 1,202.9 LTM Pro Forma Adjusted EBITDA 182.1 206.3 209.5 219.2 Interest on Senior Secured Notes and SSRCF(4) 93.3 93.3 96.3 101.9 Net Secured Leverage 5.79x 5.24x 5.52x 5.28x Total Net Leverage 5.81x 5.24x 5.52x 5.49x Interest Cover 1.95x 2.21x 2.18x 2.15x Undrawn SSRCF (5) 120.0 120.0 100.0 100.0 Available Liquidity (6) 178.7 181.7 147.4 147.4

1) Available Cash as set out on page 8 of Ardonagh Q1’20 Interim Report 2) USD 520m SSN at hedged USD/ GBP FX rate of 1.2742; USD 235m SSN at hedged FX of 1.2979; Note that Q1 2020 Interim Report translates USD debt at balance sheet FX of 1.2406 3) Including pro forma for SINO completed acquisition 4) Pro forma interest excludes RCF commitment fees 5) RCF committed facility extended to £170m as at 18 Mar’20 in addition to £50m LoC for ETV liabilities 6) Available Liquidity defined as Available Cash plus Available RCF, Available RCF is limited by the Credit Facility Basket

Leverage Financial Update

Net leverage reduced and interest cover increased vs. prior year with Available Liquidity maintained above £147m, in line with guidance

(3) (3)

COVID-19 Impact to Date

19

Ardonagh has rapidly responded to the challenges presented by COVID-19

Summary COVID-19

1. Limited financial impact to date, demonstrating the strength of our business and the resilience of the insurance distribution market

• Robust Q1’20 performance across all platforms continued into April despite lock-down, with limited overall income

impact from COVID-19 – Total group income down 1% in April vs. prior year, excluding Swinton

• Margin improvements driven by continued execution of cost saving programme and reduced marketing and T&E

expenses: +17% increase in Adj. EBITDA and +42% increase in EBITDA for April vs. prior year

2. Focused on protecting customers and staff

• 90% staff working from home with clear social distancing measures in place for remaining staff
• Continued focus on supporting our staff through multiple initiatives from ensuring secure home working environments

to live chat communities and Radio Ardonagh

• Working with our insurer partners to make sure that our customers have the right level of cover and providing high

quality risk advice to our customers at this difficult time

3. Ardonagh Community Trust supporting our communities

• Since its formation in 2018, ACT has raised over £800k from Ardonagh colleagues and partners to support charities

across the UK to deliver projects to help support the communities we operate in

• We have temporarily refocused to support those in need right now in our local communities, as a direct result of

COVID-19 - £30k of funding was granted to seven separate local projects during Q1’20

4. Applying lessons from COVID-19 to continue improving on business

20

£17.6 £20.7 £0.5 £2.8 £0.2 (£0.4)

April 2019 (Mgmt Accounts) Advisory Retail Specialty Corporate April 2020 (Mgmt Accounts)

(1) (1)

Limited overall impact of COVID-19 in April across all segments

April 2020 COVID-19

April 2020 vs. April 2019 Adj. EBITDA Bridge (£m)

Advisory income reduction from temporary level of cover adjustments, deferrals and lower new business in some segments, more than offset by strong income retention, additional cover in some segments and additional cost reductions Retail income reduction from temporary decrease in ancillary income due to lock-down and lower new business, substantially offset by increased retention and additional cost reductions, primarily in marketing and T&E expenses Specialty not impacted to date – larger, more resilient international clients and minimal exposure to heavily impacted industries

1) Includes acquisitions from the completion date

21

On-line Daily Quotes (7 day trailing average) Operational Capacity(1) (% of pre COVID-19 levels)

In Retail, performance is rapidly returning to pre COVID-19 levels and the business is well placed to capitalise on the new normal

Retail COVID-19

16 March UK advised against non- essential travel 23 March Nationwide lock-down 10 May Three step conditional plan to ease lock-down

• Business opening hours reduced in late March to best manage operational resources
• Pricing and marketing changes to focus on renewals and customer service – retention and call answer rate remained strong
• Investment in remote working capacity has resulted in a significant rebound of operational capacity
• Leveraging a wide range of online customer service channels, including chat and SMS messaging
• Acceleration of car and motorbike insurance also supported by UK Government advice to avoid public transport

Key Considerations

Quarter 2 Quarter 1 Quarter 2 Quarter 1

1) Includes Autonet, Carole Nash and Swinton call centre operatives

22

In Advisory, the business is highly diversified, significantly mitigating temporary COVID-19 impact to date

Advisory COVID-19

Expiring commission % total Δ Retention rate vs. average for month

1) Expiring commission April 2020, excluding Swinton commercial book, HAPS, Riskline and Footman James

• Retention in April remained at over

86%, broadly in line with Q1

• Impact to date predominantly

temporary and driven by level of cover adjustments to match activity and deferrals as the result of lock-down

• COVID-19 impact on existing business

limited only to those sectors which saw a temporary reduction in business volumes due to the lock-down – leisure, entertainment, retail and transport

• 96% of colleagues (including call

centres) have been working remotely since lock-down began, continuing to ensure clients remain at the centre of everything we do

• As lock-down eases, we are already

seeing increased activity as schools and

• ffices reopen and trucks get back on

the roads April 2020 Commission Retention by Sector(1) Business Impact

Property Construction Leisure & Entertainment Manufacturing Professional Services Automotive Retail Transport Engineering Agriculture Education IT Financial Services Care Home Charity Utilities Distribution Waste & Recycling Creative Tradesman Health Aerospace Travel

23

Learnings and actions from lock-down

Project Evolution COVID-19

✓ Increased home working and video conferencing ✓ Virtual call centres ✓ Drop-in corporate centres ✓ Efficient regional hub property consolidation – Leeds / London ✓ Flexible ways of working

Adapting to new ways of working Harnessing the infrastructure investment

✓ Investing in customer experience – Webchat – Self-service portals Servicing and Processing: ✓ Adoption of automation and AI / machine learning to simplify and accelerate end-to-end transactions ✓ Digital trading platforms in Specialty and Advisory

24

1. Continued strong underlying organic income growth: +4.5%(1) in the quarter 2. Sustained margin expansion: +230bps vs. prior year 3. High quality of earnings: Reported EBITDA at 80% of Adj. EBITDA for the quarter 4. All time high operating cash conversion: 93% conversion LTM Q1’20 5. Free cash flow broadly neutral LTM Q1’20 6. Limited impact of COVID-19 to date, EBITDA continued to grow in April 7. Relentless focus on supporting our customers and staff in these difficult times 8. We remain very confident in the strength and resilience of our business

Summary

Summary

1) Underlying organic income growth Q1'20 vs. Q1'19 adjusting for £1.5m COVID-19 estimated income impact and excluding Swinton; excluding COVID-19 adjustment and excluding Swinton,

• rganic income growth was +3.5% Q1’20 vs. Q1’19

Appendix

26

Segmental

1) Reported result includes acquisitions from the completion date 2) Pro forma for all material acquisitions 3) Q1’19 pro forma result not adjusted for Swinton Commercial Book transfer from Retail to Advisory (£1.2m income, £0.3m Adj. EBITDA) Q1’20

Q1 2020 Performance by Platform

4) Organic income growth Q1'20 vs. Q1'19 adjusting for £1.5m COVID-19 estimated income impact; excluding COVID-19 adjustment organic income growth was +0.1% Q1’20 vs. Q1’19 5) Underlying organic income growth Q1'20 vs. Q1'19 adjusting for £1.5m COVID-19 estimated income impact and excluding Swinton; excluding COVID-19 adjustment and excluding Swinton, organic income growth was +3.5% Q1’20 vs. Q1’19

Reported Result Q1 Pro Forma Result Q1 LTM

• Org. Gth(4)

U/L Gth(5) £m 2020 2019 Variance 2020 2019 Variance Pro Forma(2) Q1'20 v Q1'19 (%) Q1'20 v Q1'19 (%) Income Advisory 55.7 52.5 6.1% 55.7 53.5 4.2% 228.0 2.0% 2.6% Retail 64.4 69.5 (7.3%) 64.4 69.5 (7.3%) 287.2 (4.8%) 0.9% Specialty 39.0 33.9 15.0% 39.6 35.1 12.9% 152.0 10.7% 10.7% Corporate 0.9 1.6 0.9 1.6 6.7 Total 160.1 157.6 1.6% 160.7 159.7 0.6% 673.9 1.0% 4.5%

• Adj. EBITDA

Advisory 17.8 17.2 0.5 17.8 17.3 0.4 70.6 Retail 20.1 18.4 1.7 20.1 18.4 1.7 99.0 Specialty 9.3 6.7 2.6 9.4 7.1 2.4 34.3 Corporate (3.5) (3.0) (0.6) (3.5) (3.0) (0.6) (15.1) Total 43.6 39.3 4.3 43.7 39.8 3.9 188.8

• Adj. EBITDA Margin

Advisory 31.9% 32.8% (90 bps) 31.9% 32.4% (50 bps) 31.0% Retail 31.2% 26.5% +470 bps 31.2% 26.5% +470 bps 34.5% Specialty 23.8% 19.7% +410 bps 23.8% 20.1% +370 bps 22.6% Total 27.2% 25.0% +230 bps 27.2% 24.9% +230 bps 28.0%

(1) (2)(3)

27

Advisory Financial Highlights

• Strong overall income growth of +6.1% supported by

successful integration of "add-on" acquisitions and the transfer

• f the Swinton Commercial book from Retail, combined with

increased income from insurer trading arrangements

• +2.6% underlying organic income growth(6), with growth across

Insurance Broking, HAPS and Footman James, primarily driven by strong income retention, up 70bps vs. prior year

• Adverse impact on March from COVID-19 estimated at c.

£0.5m income and EBITDA

• Continued execution of Insurance Broking placement strategy

to reduce the number of carriers and deliver better outcomes for clients (c. 80% of Insurance Broking premium now with 26 strategic and partner markets significantly rationalises overall number of markets)

• Two small, highly complementary "add-on" acquisitions (£1.1m

total) completed Feb/Apr’20 and continued buy-out of ARs in HAPS at favourable multiples

• Insurance Broking awarded with a gold Investor in Customers

(IIC) rating for the 2020 survey, a marker of excellent customer service and colleague engagement Quarter 1 2020 Key Highlights

Strong underlying organic growth while maintaining high margins despite COVID-19 impact underpinned by continued retention improvement

GWP £257.3m

+5.8% (Q1’19: £243.2m)

• Adj. EBITDA Margin

31.9%

• 90bps (Q1’19: 32.8%)

Retention(3)(5) 88.1%

+70bps (Q1’19: 87.4%)

New Business(4)(5) £6.0m

• 2.6% (Q1’19: £6.1m)

Advisory Q1 2020

1) Reported result includes acquisitions from the completion date 2) Pro forma for the small acquisitions of HIG and MHG, completed 31 Jan’19 3) Retained income vs. prior year 4) Gross new business before introducer/payaway costs 5) Includes Riskline / Footman James business transfers in both years – excludes income from transferred Swinton Commercial book 6) Underlying organic income growth excludes impact from acquisitions (HIG & MHG), adjusts for £0.5m COVID-19 estimated income impact and excludes Swinton Commercial book transfer

Reported Result Q1 LTM Q1'20 £m 2020 2019 Variance Pro Forma(2) Income 55.7 52.5 +6.1% 228.0

• Adj. EBITDA

17.8 17.2 +0.5 70.6

• Adj. EBITDA Margin

31.9% 32.8% (90 bps) 31.0%

(1)

28

Retail Financial Highlights

• Income decline of 7.3% driven primarily by internal transfer of

Swinton Commercial book to Advisory, planned run-off of legacy Swinton back-book as well as impact of COVID-19 primarily in ancillary income, car hire and caravan and lower new business (expected to be predominantly temporary)

• Adverse impact on March from COVID-19 estimated at c.

£1.0m income and £0.5m EBITDA

• Underlying organic income growth of +0.9%(5) driven by strong

policy retention across all Retail businesses (retention overall up +220bps vs. prior year) and significant increase in new business in PSL

• Total policies under management stable vs. prior year, despite

planned remediation in Swinton. Excluding planned remediation of Swinton household book, policies under management up +2.1%(2)

• Lettings market continues to drive incremental volume in PSL
• Strong EBITDA growth of +1.7m (+9.1%) driven by significant

cost reductions from the Swinton integration programme and branch closures – completed during 2019 – as well as strong cost saving delivery in S&P Quarter 1 2020 Key Highlights

Significant margin improvement +470bps and Adj. EBITDA growth despite planned income remediation in Swinton as cost savings and synergies are delivered

Retail Q1 2020

1) Reported result includes acquisitions from the completion date 2) Excludes closed book of monthly products (total including closed book of monthly products (1.3)%) 3) Retained policies vs. renewals available for Retail Operating Segment and PSL and retained commission vs. renewal commission available for S&P

#Policies Under Mgmt.(2) 3,264k

• 0.2% (Mar’19: 3,271k)
• Adj. EBITDA Margin

31.2%

+470bps (Q1’19: 26.5%)

Retention(3) 77.7%

+220bps (Q1’19: 75.6%)

#New Bus. Policies(4) 191k

• 13.7% (Q1’19: 221k)

4) Excludes S&P 5) Underlying organic income growth Q1'20 vs. Q1'19 adjusting for £1.0m COVID-19 estimated income impact and excludes Swinton

Reported Result Q1 LTM Q1'20 £m 2020 2019 Variance Pro Forma(2) Income 64.4 69.5 (7.3%) 287.2

• Adj. EBITDA

20.1 18.4 +1.7 99.0

• Adj. EBITDA Margin

31.2% 26.5% +470 bps 34.5%

(1)

29

Speciality Financial Highlights

• Income growth of +15.0%, organic income growth(4) of

+10.7%, driven by Rural acquisition and transformational hires, with underlying growth in core specialist business lines through high client retention (50%+ clients with more than 10 years tenure) and strong new business wins across the Specialty portfolio

• Margin expansion of +410bps driven by maturing income

producers, growth in highly profitable core specialisms and annualisation of cost savings

• Further investment in transformational hires and delivering
• perational efficiencies continue to be the major strategic

focus

• A number of new producers successfully secured and being

embedded, with further live opportunities being considered

• Continued focus on improving MGA underwriting profitability
• APS has quickly become a key partner for top insurers,

providing valuable insight - Additional contract for £300k annual value signed in Q1

• No material adverse impact to date from COVID-19

Quarter 1 2020 Key Highlights

Strong organic income growth and margin improvement as new producers rapidly build to maturity

Specialty Q1 2020

1) Reported result includes acquisitions from the completion date 2) Pro forma for the small acquisitions of PfP (completed on 31 Jan’19) and Rural (completed on 28 Feb’20) 3) Stated at constant Q1’19 actual GBP:USD FX: average 1.3162. Actual GBP:USD FX: average 1.2785 for Q1’20 (62% of Q1’20 Specialty platform income in USD), and removing the year-on-year impact of hedging (£1.0m)

Organic Growth(4) +10.7%

(vs. +4.3% 2019)

Producer Hires +5

(vs. +20 2019)

4) Organic income growth at constant FX, excludes acquisitions, accounting standard changes, profit share and other non-recurring items

Reported Result Q1 LTM Q1'20 £m 2020 2019 Variance Pro Forma(2) Income 39.0 33.9 +15.0% 152.0

• Adj. EBITDA

9.3 6.7 +2.6 34.3

• Adj. EBITDA Margin

23.8% 19.7% +410 bps 22.6% At Constant Forex & Excluding Hedge Accounting: (3) Income 37.3 33.9 +10.1%

• Adj. EBITDA

7.6 6.7 +0.9

• Adj. EBITDA Margin

20.4% 19.7% +70 bps

(1)

30

The Group presents results to investors using alternative performance measures (‘APMs’). Pro Forma for Completed Transactions information seeks to present the results as though the acquisitions of Nevada 2 and Rural had occurred on 1 January 2019. The Group presents EBITDA and Adjusted EBITDA as important APMs for both reported and pro forma results. The objective of presenting APMs is to facilitate readers’ understanding of progress irrespective of the capital structure and before deduction of significant business investment and transformation costs, which have been a key element of the Group’s fix, build and grow strategy in recent years. This slide presents the reconciliations between the IFRS comprehensive gain/(loss) for the three months ending 31 March 2020 and the key APMs. The full IFRS results for the 3 months ended 31 March 2020 can be found

• n the website www.ardonagh.com.

EBITDA and Adjusted EBITDA measures may not be comparable to similarly titled measures used by other companies. EBITDA, Adjusted EBITDA and EBITDA margins are not measurements

• f

financial performance under IFRS and should not be considered as alternatives to

• ther indicators of the Group’s operating performance, cash flows or any
• ther measure of performance derived in accordance with IFRS.

1) Reported result includes acquisitions from the completion date 2) Pro forma for all material acquisitions and disposals including acquisition of Nevada 3 Businesses MHG, HIG & PfP (31 Jan’19) and Rural (28 Feb’20)

Reconciliation of YTD IFRS Loss to Alternative Performance Measures

Reconciliation to IFRS

Reported(1) Pro Forma for Completed Transactions(2) Quarter 1 (£m) 2020 2019 2020 2019 Reconciliation of the IFRS Loss for the period to EBITDA and Adjusted EBITDA Loss for the period (13.7) (22.4) (13.1) (24.8) Eliminate: Items excluded from EBITDA Finance costs 27.2 28.7 27.2 28.7 Tax credit (0.1) (4.9) (0.1) (4.9) Depreciation, amortisation and impairment of non-financial assets 21.8 24.8 21.9 25.3 Loss from disposal of assets 0.4 0.4 0.4 0.4 Foreign exchange movements (0.8) 1.5 (0.8) 1.5 EBITDA 34.9 28.1 35.6 26.1 Eliminate: Items excluded from Adjusted EBITDA Transformational hires 0.9 1.5 0.9 1.5 Business transformation costs 4.9 10.8 4.9 10.8 Legacy costs 0.6 1.9 0.6 1.9 Other costs 0.9

• 0.9
• Regulatory costs

0.0 0.3 0.0 0.3 Acquisition and financing costs 1.2 (0.6) 0.7 (0.6) Gain on disposal of business

• (2.6)
• Adjusted EBITDA

43.6 39.3 43.7 39.8

31

This investor presentation contains non-IFRS measures and ratios, including Adjusted EBITDA and Pro Forma Adjusted EBITDA, that are not required by, or presented in accordance with, IFRS. Non-IFRS measures are defined by us as set out below. “Acquisition and Financing Costs” defined as costs associated with acquiring businesses, with disposing of parts of the business, with raising additional financing (legal and accounting advisors, rating agencies, etc.), and with a change in the value of contingent consideration (after the measurement period has ended). “Adjusted EBITDA” or “Adj. EBITDA" defined as EBITDA after adding back Management Reconciling Items. “Adj. EBITDA Margin” defined as Adjusted EBITDA divided by Income. “Available Cash” defined as total unrestricted own funds plus ETV restricted funds. “Available Liquidity” defined as Available Cash plus Available RCF (Revolving Credit Facility). “Available RCF” defined as available and undrawn RCF. “Business Transformation Costs” defined as costs (other than restructuring costs) incurred in transforming the legacy Towergate business, in realising synergy benefits from acquired businesses by reorganising management and business structures and by implementing new systems and processes, in reorganising group structures, in transforming business processes, in terminating contractual arrangements, and in driving a cost base that is the right size for the Group. “EBITDA” defined as earnings after adding back finance costs (including from 1 January 2019 effective interest on lease liabilities), tax, depreciation (including with effect from 1 January 2019, depreciation of lease right-of-use assets), amortisation, impairment of non-financial assets, profit/loss on disposal of non-financial assets (except for right-of- use assets in the year of transition to IFRS 16), foreign exchange movements and dividends received. “Free Cash Flow” defined as cash flow after proceeds from disposals, investments and interest, but before ETV costs, M&A and other financing cash flows. “Income” defined as Commission and fees, other income, investment income and finance income. “Legacy Costs” defined as non-repeatable costs arising from pre-2016 retention plan payments to key staff so as to provide long-term stability to the business, from insurer loss ratio performance for legacy (to 2018 underwriting years inclusive) underwriting disciplines and decision making, from settlement of historic enhanced transfer value liabilities, and from write down of legacy IBA balances and other receivable balances whilst enhanced processes are being embedded. “LTM” defined as the arithmetical sum of the last twelve months results, it should be noted that the 2017 results have not been restated for IFRS accounting standard changes.

Non-IFRS Financial Measures

Glossary

32

“Management Reconciling Items” defined as:

• Discontinued operations
• Restructuring costs
• Transformational hires
• Business transformation costs
• Regulatory costs
• Acquisition and financing costs
• Profit/loss on disposal of a business and investments (unless a discontinued operation)
• Legacy costs
• Other costs

“Operating Cash Conversion” defined as Adjusted EBITDA less working capital movement and maintenance capital expenditure, over Adjusted EBITDA. “Organic Growth” defined as Growth adjusted to remove the impact of acquisitions, disposals, FX, hedges, back-books, accounting changes and certain one-off and distorting items. “Other Costs” defined as:

• Costs incurred in 2020 that are directly attributable to the coronavirus pandemic in that they would not otherwise have been incurred;
• The expense arising from equity-settled and cash-settled share-based payment schemes; and
• Non-repeatable costs arising from external reviews and process improvements in financial, cash and liquidity reporting, and from commercial disputes.

“Pro Forma Adjusted EBITDA” or “Pro Forma Adj. EBITDA” defined as the Adjusted EBITDA of the business as adjusted for certain cost saving initiatives and cost synergies. “Pro Forma for Completed Transactions” defined as IFRS numbers which have been adjusted to: (a) include the results of new acquisitions from the first day of the immediately preceding comparative year, (b) remove the results and gain or loss on disposal of discontinued operations, and of other business disposals from the current and prior year, where they have occurred prior to the end of the reporting period, and (c) reflect financing transactions as if they had occurred on the first day of the prior year. “Regulatory Costs” defined as costs associated with one-off regulatory reviews and with changes in the regulatory and compliance environments.

Non-IFRS Financial Measures (cont’d)

Glossary

33

“Transformational Hires” defined as:

• Sign-on bonuses and other non-discretionary bonuses incurred in 2020 and related to new hires in Ardonagh Portfolio Solutions;
• Sign-on bonuses and other non-discretionary bonuses related to new hires in Group functions; and
• Net losses associated with new joiners hired to drive transformational business growth in the Insurance Broking, Specialty & International or MGA operating segments

to whom a capacity restriction (no insurer to underwrite policies) or restrictive covenant applies. The net losses are calculated as the recruitment costs, sign-on bonuses, costs of retention and salary (‘salary-related costs’) incurred during the period of the capacity restriction or covenant, or during the one year period after the capacity restriction or covenant has ended, less the income generated by those new joiners during that period. (If the net losses become negative, so that income generated exceeds salary-related costs, this is no longer an MRI.).

Non-IFRS Financial Measures (cont’d)

Glossary