Update: Insurance Wholesaler AmWINS Is Recapitalizing: CEO DeCarlo

March 13, 2012

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 Tuesday, 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 LLC. Parthenon plans to sell its 50 percent stake and management will also be ceding 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 Reuter’s request for comment.

[However, on Wednesday, 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 in an emailed statement.]

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 Crump Group Inc. — the second largest wholesale insurance distributor in the United States — to J.C. Flowers & C.o LLC, about nine times projected EBITDA and 1.8 times projected revenue.

U.S. insurance broker Brown & Brown Inc. said in December it 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. AmWINS subsequently registered for an initial public offering, but withdrew the filing in 2007. The company has since grown aggressively through acquisitions and currently handles over $6.7 billion in annual premiums.

Financial Technology Partners LP is advising AmWINS on the sale, while Goldman Sachs Group Inc. is providing staple financing for the transaction.

 

 

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Latest Comments

  • March 15, 2012 at 2:52 pm
    thebig lie says:
    $500m in debt - a Recap? DeCarlo needs to call Chris Flowers for advice, better yet - call his x-buddy Corzine's office at MF Global for the handbook on getting oneself out o... read more
  • March 14, 2012 at 4:51 pm
    reality bites says:
    There is a difference fraud and mis-statement on financial reporting. Let's hope it wasn't quite as dire.
  • March 14, 2012 at 3:46 pm
    Agent says:
    Willis just lost $28 million due to employee fraud and had to restate earnings. Something tells me their Employee Dishonesty bond did not cover the loss.
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