Private equity firm Carlyle Group Inc (CG.O) informed reporters on May 9 that it had decided to buy U.S. specialty insurance provider NSM Insurance Group from White Mountains Insurance Group Ltd (WTM.N) in a $1.78 billion cash deal.
Carlyle said the deal is expected to be completed in the second half of 2022. The transaction is estimated to accrue $280 per share to White Mountains’ adjusted book value.
NSM Insurance, based in Pennsylvania, is among the largest independent insurance brokerages that underwrite policies for trucks, pets, workers’ compensation, behavioral healthcare, and non-profit organizations. According to its website, it generates over $1 billion in premiums for more than one million clients.
James Burr, the Carlyle managing director, said in an interview:
“We will look to invest back into the platform a bit more heavily and ramp up M&A activity. There’s a lot of white space in business-to-customer and improving technology.”
Private equity firms have been prompting mergers in the insurance brokerage sector. M&A in the insurance sector grew more than twice in volume to a total of $58 billion last year from $22 billion a year earlier, according to consulting firm Deloitte.
Carlyle sold its majority stake in London-based insurance brokerage PIB Group in 2021 to private equity firm Apax Group for an unannounced amount.
Carlyle has invested over $10 billion in the financial services space, including U.S. insurance claims firm Sedgwick Claims Management Services, China’s Ant Group, and former payroll services provider BenefitMall.
In the NSM Insurance deal, the Bermuda-based White Mountains and Carlyle were advised by J.P. Morgan, Morgan Stanley, Cravath, Swaine & Moore LLP, Rosen & Katz, Lipton, and Wachtell.