Lee Equity Partners has agreed to acquire a majority stake in K2 Insurance Services, a US-based specialty insurance services holding company, for an undisclosed sum.
K2 owns and controls a diverse group of managing general agents (MGAs) serving the specialty property and casualty industry.
Through its MGAs, it markets, underwrites and services over $650m annually in niche commercial and personal insurance premiums.
The senior management team of K2 will retain a significant equity stake in the business and also continue to lead the company. The management team is led by the company’s president and CEO Bob Kimmel.
Kimmel said: “Since our founding in 2011, K2 has become one of the fastest growing and largest program managers in the US, with a focus on generating industry leading underwriting results for our carrier partners.
“With Lee Equity’s knowledge and experience investing in the insurance industry, we look forward to continuing to build on our proven track record of attracting high quality specialty underwriting teams, acquiring specialty MGAs, and growing organically. We will do this by offering our MGAs new distribution channels, technology enhancements and access to additional carrier partnerships.”
The merger agreement also requires K2 to spin off its specialty insurance carrier Aegis Security Insurance Company.
Aegis Security will now be under the ownership of its current equity partner, Endeavour Capital and Patrick Kilkenny.
Mark Gormley, a partner at Lee Equity said: “K2 has emerged as a market leader in the fast-growing MGA segment, and we are thrilled to partner with Bob and his team in K2’s next chapter of growth.
“K2’s differentiated platform is well positioned to continue revolutionising the insurance sector by leveraging technology to achieve unparalleled operational efficiencies and deliver superior underwriting performance.”
The financial details of the transaction have not been disclosed. It is expected to close in the second quarter of 2019.