PE attracted to brokers – Mazars

Private equity firms continue to be interested in the insurance sector, according to Mazars, speaking at the Reinsurance Rendez Vous in Monte Carlo. While prominent recent deals have focused on carriers – notably Apollo’s purchase of Aspen – brokers are also an attractive target for private equity, according to the French accounting firm.

“We’re involved in some deals for smaller brokers at the moment and advising one much larger broker,” said Simon Fitzsimmons, director for mergers and acquisitions (M&A) within Mazars’ deal advisory practice.

“People say it’s a hot market for M&A, but it’s been this way for some years now,” Fitzsimmons said.

“The insurance sector still makes good money so it’s attractive to private equity,” he continued. “And once they put money into this market, they want to put more in. It’s a ‘buy and build’ mentality.”

Mazars has been involved in four recent broker deals in the UK, Fitzsimmons said. “We’re still seeing PE sniff around, chasing new deals,” he added.

Stephen Skeels, a partner and national valuations head for the UK at Mazars, added: “Brokers represent a non-capital-intensive way of getting into the insurance space.”

Skeels noted that while prices were going up, it is still hard to tell how sustainable they are. The insurance linked securities market has stayed stable, he noted.

“There’s been no pull-out like some people hoped or expected,” he said. “They’ve shown stability and been consistent and reinvested in the market even after taking losses.”