For Specialty Insurance Firm K2, It’s Time for a New Private Equity Backer

By | April 24, 2019

San Diego, Calif.-based K2 Insurance Services LLC is in the process of recapitalizing with a new private equity firm, one of the owners has confirmed.

Privately-held K2 is a specialty insurance services holding company with a diverse set of program administrators, retail agencies and an A.M. Best A- rated insurance carrier.

While the company has confirmed the resale is in progress, details of the deal are as of yet unknown.

K2 was formed in 2011 by Chairman Pat Kilkenny and President & CEO Bob Kimmel, in partnership with investment firm Endeavour Capital. Kilkenny formerly ran and owned Arrowhead General Insurance. Kimmel served as executive vice president and MGA Practice leader at Guy Carpenter, an insurance intermediary and a division of Marsh & McLennan Companies.

The firm got backing from private equity firm Endeavour Capital roughly eight years ago.

“Our PE firm has been with us for eight years and we have been looking to recapitalize K2 with another PE firm,” Kimmel wrote in response to an email query for comment on this story.

Tim Cunningham, managing director of OPTIS Partners, which has been involved with M&A transactions representing both buyers and sellers, said the sale to another PE firm isn’t out of the ordinary – in fact it may have been a bit overdue.

“The typical hold period for private equity firms is five to six years,” Cunningham said. “We’re seeing a lot of this in the industry, that private equity firms are reselling insurance distribution platforms to other private equity firms.”

From its beginning K2 has grown, and has made numerous acquisitions.

K2’s first acquisition was in 2012 when it bought a majority stake in Midwestern Insurance Alliance, which specializes in workers’ compensation for transportation risks. Later that year, K2 invested in a new Texas MGA, Mission Select Insurance Services, which focuses on residential property.

More recently, K2 in January announced the acquisition of the assets and operations of Mid-America Risk Managers Inc., an Omaha, Neb.-based farm and agricultural focused specialty general agency that distributes specialty insurance products through independent agents and brokers.

K2 in 2017 acquired Star & Shield Insurance, an affinity distributor of insurance products to members of the public safety community and their families located in Alpharetta, Ga. That same year the company acquired the WaterPlus, FirePlus and JPA in-force expirations from San Francisco, Calif.-based Alteris Insurance Services Inc.

Kilkenny and Kimmel have been in the industry numerous years amassed among several recognizable industry names. The pair sat down with Insurance Journal in 2016 to talk about using their combined 60 years of insurance experience buying up and developing businesses with the backing of Endeavour Capital.

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