White Mountains Buys Majority Stake in Program Manager NSM

April 2, 2018

Bermuda-based insurance holding company White Mountains Insurance Group is acquiring a majority equity stake in NSM Insurance Group (NSM), the specialty insurance program administrator.

The transaction values NSM at approximately $388 million, according to the announcement. White Mountains said it intends to fund the acquisition through a combination of cash and new debt issued by NSM.

Pennsylvania-based NSM places in excess of $500 million in premiums annually through about 6,000 brokerage firms and 100 insurance carriers. Its specialty insurance niches include collector cars, non-profit organizations, sports and wellness centers, specialty real estate and pet insurance.

NSM has been growing. In the past 12 years NSM has completed more than 18 transactions and launched eight new programs. The program manager and managing general underwriter said it is “actively seeking” to acquire other program managers and specialty books of business.

“White Mountains brings NSM strong financial backing and a long-term view of the business which will enable us to continue our organic and acquisition growth strategies both in the U.S. and UK,” said Geof McKernan, CEO, NSM Insurance Group, in prepared remarks.

The transaction is expected to close by the end of the second quarter of 2018.

NSM partnered with private equity firm ABRY Partners in 2012 to help fund its acquisition strategy. In 2015, American International Group Inc. acquired a controlling stake in NSM from ABRY and NSM management.

Last year, NSM, ABRY Partners and AIG entered into a joint partnership that allowed NSM to continue to seek new acquisitions. AIG contributed its controlling equity ownership of NSM into the joint venture, which was majority owned by ABRY.

In 2013, NSM acquired Executive Liability Managers Insurance Brokers. In January 2014, it acquired American Collectors Insurance in Cherry Hill, New Jersey, a provider of specialty insurance for collectibles and collector vehicles. In October 2014, it added Specialty Aviation Underwriters in Texas. In 2016 it acquired another collector car insurance program, Heacock Classic out of Florida and last October it acquired Vantage Holdings, a U.K.-based collector car and outdoor leisure program administrator. Vantage was NSM’s first international acquisition. In its most recent acquisition in February, it bought Nashville transportation broker TranSpec.

NSM manages all aspects of placement on behalf of its carriers, including product development, marketing, underwriting, policy issuance and claims.

Merger & Acquisition Services acted as financial advisor to White Mountains, while Cravath, Swaine & Moore LLP provided legal advice. Latham & Watkins LLP acted as legal advisor to selling equity holders and NSM, and McDonald Hopkins LLC acted as legal advisor to NSM management.

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