Wholesaler AmWINS “Recapitalizing” for $1.5 Billion

The private equity partner of AmWINS Group Inc, the U.S.’s largest wholesale insurance broker by premiums placed, selling its 45 percent stake in the company after a 7-year investment, at a valuation of about $1.5 billion, according to a report by Reuters.

However, AmWINS CEO Steve DeCarlo stated, “AmWINS is not for sale. It is simply recapitalizing, which is part of the normal lifecycle of a private equity funded business.”

AmWINS is owned by its management and by buyout firm Parthenon Capital Partners LLC, which bought a majority percent stake in AmWINS in 2005.

The wholesaler, which owns brokerage, underwriting and group benefit operations across 21 countries, is said to have attracted interest from private equity firms and strategic buyers.

A $1.5 billion enterprise valuation for AmWINS would equate to about 13 times its 2011 earnings before interest, tax, depreciation and amortization (EBITDA) of $117 million, according to the Reuters article.

An insurance industry mergers and acquisitions expert speculates the move could have been inspired by the recent acquisitions of Crump Group Inc. by BB&T Corp. and Arrowhead General Insurance Agency Inc. by Brown & Brown Inc.—both multi-million-dollar deals.

“Given that most private equity firms like to be out of a deal in 5 years, they may be thinking that the Crump and Arrowhead deals, coupled with some market firming, would have a positive impact on value,” said Tim Cunningham, owner of Chicago-based OPTIS Partners LLC. “And the 13 times EBITDA is reflective of a significant strategic premium.”

However, Cunningham doesn’t think the move signals an M&A heatup for wholesalers. “Transactions like this and the Crump offering are so big that they don’t have an influence on bread-and-butter transactions,” he said. “What it does reflect is the overall view that the firming market is going to drive value and it’s a better time to both sell and buy, particularly on the wholesale side.”

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.