Filed Under:Markets, Reinsurance

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.”

Featured Video

Most Recent Videos

Video Library ››

Top Story

6 homeowners’ policy endorsements agents and brokers need to know

It's the insurance agent or broker's job to explain a policy to the buyer, including the available endorsements, and they need to know which endorsement best fits the client’s situation.

Top Story

Top large commercial brokers and insurers based on customer satisfaction

The key variables driving overall commercial insurance customer satisfaction are broker expertise and insurer profitablity, according to the J.D. Power 2016 Large Commercial Insurance Study.

More Resources

Comments

eNewsletter Sign Up

PropertyCasualty360 Daily eNews

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

Mobile Phone

Advertisement. Closing in 15 seconds.