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Influx of fresh capital drives brisk pace of M&A activity


Mergers and acquisitions activity continues in the excess and surplus lines sector, while new capital continues to enter the market.

Among recent deals, Cincinnati-based Core Specialty Insurance Holdings Inc. said in April it was merging with Long Beach, New York-based Lancer Financial Group Inc. in a stock and cash transaction, resulting in a post-merger Core Specialty with more than $1 billion in equity capital. 

In July, New York-based Amynta Group said it had acquired Scion Underwriting Services, a managing general agency that provides specialty casualty insurance to the E&S market, from London-based Brit Ltd.

In August, Dual Group, the underwriting arm of London-based brokerage Howden Group Holdings Ltd., agreed to acquire Align Financial Holdings, a San Diego-based general agency and underwriting management group, for $800 million. 

“There continues to be a fair amount of M&A activity on the wholesale broker side, and there are certainly markets that are looking to continue to acquire on the agency side. I don’t see any real end in sight for that,” said Eric Blecker, Hartford, Connecticut-based president of Northfield Excess & Surplus Lines, a Travelers Cos. Inc. unit

In November, Core Specialty said it had recapitalized StarStone U.S. Holdings Inc. with $610 million in new equity capital provided by investors. It operates through StarStone Specialty Insurance Co., a U.S. excess and surplus lines insurer, and StarStone National Insurance Co., an admitted insurer.

“We thought that the (E&S) market really demanded additional capacity,” on the “heels of a couple of years of market disruption,” said Jeff Consolino, Core Specialty’s president and CEO.

Among other capital infusions, Convex Group Ltd., a London and Bermuda-based specialty insurer and reinsurer formed in 2019, raised an additional $500 million in capital in January from an investment firm.

Dallas-based Upland Capital Group Inc. was launched early this year and said that with $200 million in funding it would offer a portfolio of excess and surplus lines casualty, property and specialty insurance products, with an initial focus on excess casualty products distributed through wholesale brokers.

In June, San Francisco-based Pathpoint, a digital excess and surplus brokerage, said it had raised $30 million in funding, its third round of financing since it was founded in 2020. 

The new business coming into the sector is “not coming in massive chunks,” but slowly, and “with a more intelligent thought process” than in the past, said Cliff Hope, Atlanta-based head of property for Lexington Insurance Co., a unit of American International Group Inc. 

David Bresnahan, executive vice president of Berkshire Hathaway Specialty Insurance Co. in Boston, said, however, that while “there are definitely new companies and carriers popping up,” they tend to focus on certain market segments and are unlikely to have broad risk appetites that impact the overall sector.