Private Equity Firm Buys Confie Seguros from Genstar

Confie Seguros was acquired by Boston-based private equity firm ABRY Partners in a deal that closed on Nov. 9, which the rapidly expanding auto insurer focused on the U.S. Hispanic market says will help it grow to double or triple its size in the next few years.

ABRY Partners invested in and acquired a majority of the equity of the large personal lines insurance broker from San Francisco, Calif.-based Genstar Capital. ABRY focuses on business and information services, media, and communications investments. Since 1989, ABRY has completed more than $36 billion of leveraged transactions and other private equity and mezzanine investments, representing investments in approximately 450 properties.

ABRY Partners’ past investments in the insurance industry include a majority-interest acquisition of N.J.-based insurance outsourcing services firm York Risk Services Group in December 2010 and an investment in NSM Insurance Group, a Penn.-based insurance program administrator, in January 2012.

Terms of the deal were not disclosed. J.P. Morgan Securities LLC and RBC Capital Markets advised Confie Seguros on the transaction, while Alexander W. Sica of Sica Consultants Inc. advised ABRY Partners. RBC Capital Markets and GE Capital provided debt financing commitments. No management changes are expected.

Buena Park, Calif.-based Confie Seguros has since its inception in 2008 built a massive portfolio of more than 300 regional auto insurance brokerages. It has market positions in California, Arizona, Texas, Florida, Washington, Oregon, New York, New Jersey and Nevada. It has plans to expand in states including, Illinois, Georgia and the Carolinas. Confie Seguros has reported annual revenues of more than $200 million.

Over the past year Confie Seguros has closed more than 20 deals for retail agencies, and the ABRY acquisition will help continue that momentum, said Confie Seguros President Mordy Rothberg.

“We got a huge pipeline and we’re expanding,” he said. “Now we have more resources, including capital, to grow the company both organically and externally from acquisitions.”

Confie Seguros CEO Joe Waked said they started working on the deal with ABRY in July. Waked said plans now are to accelerate growth in states they are in, as well as into other states.

Not only is the firm planning to add to the web and call centers it has, from which it sells insurance to 49 states, Waked said, “but we believe strongly in the brick-and-mortar concept. Our consumers like personal relationships and interaction, which is why we have 300 offices in nine states. We believe there are tremendous opportunities out there to really build upon that and double or triple our size over the next few years.”

Neither Rothberg nor Waked would offer much about the deal, including saying how much capital ABRY agreed to supply.

“What I can assure you is ABRY has made a substantial commitment to invest in this company’s future and its growth strategy,” Waked said. “They’re going to be committing capital.”

“We are very pleased with the outcome of this investment for our investors and also for Confie Seguros’s management team and employees,” J. Ryan Clark, a managing director of Genstar, said in a statement. “Building Confie into a strong national insurance provider demonstrates the firm’s strategy of identifying key growth sectors and working with successful industry executives like John Addeo and CEO Joe Waked to build successful businesses. We want to thank John Addeo, John Klaeb, Joe Waked, Mordy Rothberg and the rest of the Confie management team for a great partnership.”

Brent Stone, a partner at ABRY, said in a statement: “We are excited to be partnering with Joe Waked, Mordy Rothberg and the rest of the management of Confie Seguros. We believe strongly in the business model and the ability of management to continue to expand the company into new geographies and lines of business.”

Rothberg explained the switch in equity partners.

“Genstar has been great partners for us,” he said. “We partnered with them in 2008. Private equity works in five year horizons and it makes sense. We decided this would be a good time.”

Topics Mergers & Acquisitions