The veteran private equity investor JC Flowers has continued its interest in the UK insurance market with news today that the firm has acquired controlling stakes in two London market broking firms: the marine-focussed SSL and the delegated underwriting specialist, Endeavour.
Re-Insurance.com tracks the history of JC Flowers’ investments in the insurance sector and wider financial services markets.
James Christopher Flowers founded his namesake firm in 1998 following a successful 20-year career at Goldman Sachs, where he was a founder of Goldman’s financial institutions merger practice in the late 1980s.
He left the investment bank, going solo to launch his own private equity firm, which has become a leading investor in financial services businesses. When the financial crisis gripped the global economy ten years later he came to wider prominence as one of the trusted advisers to Treasury Secretary Henry Paulson and was even portrayed in Golden Globe and Emmy nominated film Too Big to Fail.
JC Flowers has been a serial deal-maker but is arguably as well-known for the deals it didn’t complete. Those include a $25bn agreed bid to acquire US mortgage guarantor Sallie Mae, the distressed UK bank Northern Rock, a £3.5bn bid for UK insurer Friends Provident and a package of retail branches from RBS.
Nonetheless, since its inception the firm has invested nearly $15bn in total including 16 different investments in insurance and reinsurance - including SSL and Endeavour. Indeed, around 37 percent of JC Flowers portfolio was thought to be invested in insurance assets before its latest acquisitions. The fund manager has around $6bn in assets under management.
Enstar was one of the first investments for JC Flowers back in 1998 and it proved a stellar success. The firm sold the majority of its stake - 2 million shares, or around 7.2 percent of the company - in the Bermudian legacy acquisition vehicle to Stone Point in 2012
In 2005, it purchased the US wholesaler Crump from Marsh & McLennan Companies in the aftermath of the then New York attorney-general Eliot Spitzer mandating the sale of wholesalers by the big brokers as part of his campaign against the industry before building out the firm and then selling to BB&T in a $570mn deal in 2012.
The firm has also invested in a number of Bermudian reinsurance side cars – owning stakes in AIG and Hannover Re vehicles - Concord Re and Kaith Re respectively - over the years.
Until the deal with SSL and Endeavour, the most recent addition to JC Flowers’ (re)insurance portfolio was MGA UK General Insurance, acquired from Primary Group in in March 2017.
The personal lines insurer is understood to write £400mn ($558mn) and added to an existing roster of 14 different insurance assets. It was also thought to have been an under-bidder in the auctions of UK broker Carol Nash and Ryan Specialty’s direct business unit last year.
It will be interesting to see whether the acquisitions of SSL and Endeavour will be a springboard for further acquisitions of insurance brokers by the firm…