The owners of AmWINS Group Inc., the largest wholesale insurance broker in the United States by premiums placed, have put the company up for sale, expecting a valuation of about $1.5 billion, three people familiar with the matter said on March 13, according to Reuters.
An auction for a majority stake in AmWINS, which owns brokerage, underwriting and group benefit operations across 21 countries, is underway and has attracted interest from private equity firms and strategic buyers, the people said.
AmWINS is owned by its management and by buyout firm Parthenon Capital Partners. Parthenon plans to sell its 50 percent stake, and management will cede some of its ownership, offering the buyer control of AmWINS, one of the people in the Reuters report said. The exact stake for sale is open to negotiations, the person added.
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, another person said.
Representatives of AmWINS and Parthenon did not immediately respond to Reuters‘ request for comment.
However, on March 14, AmWINS CEO Steve DeCarlo responded to the report. “AmWINS is not for sale. It is simply recapitalizing, which is part of the normal lifecycle of a private equity-funded business,” he told Insurance Journal.
Deal making in the U.S. financial services sector has been subdued for private equity firms, although a couple of buyout firms recently exited from investments in insurance companies. Last month, BB&T Corp. agreed to pay $570 million in cash for the life, property and casualty insurance operations of wholesale insurance distributor Crump Group Inc. to J.C. Flowers & Co. LLC, about nine times projected EBITDA and 1.8 times projected revenue.
U.S. insurance broker Brown & Brown Inc. in December agreed to buy Arrowhead General Insurance Agency Inc. for $395 million in cash from Spectrum Equity Investors, JMI Equity and a management equity-holder group.
Parthenon bought a majority percent stake in AmWINS in 2005. The company has since grown aggressively through acquisitions, and currently handles more than $6.7 billion in annual premiums.
Financial Technology Partners LP is advising AmWINS on the sale. Goldman Sachs Group Inc. is providing staple financing for the transaction.