All Risks working with Reagan Consulting on sale process

Independent US wholesale broker and MGA platform All Risks is in a sale process advised by Reagan Consulting that is expected to lead to a transaction with a strategic buyer in the intermediary space, The Insurer can reveal.

Multiple sources said the process had been active pre-Covid-19 and is understood to be ongoing.

Hunt Valley, Maryland-headquartered All Risks is owned by management and employees and led by CEO Nick Cortezi and president Matthew Nichols.

It is estimated to place or manage north of $2bn in premium volume, which is thought to put it in fourth place at the head of the mid-sized firms some distance behind the three giants of the wholesale sector.

Although details of potential acquirers in the process have not been confirmed, the size of All Risks means that only the largest wholesale brokers such as CRC, Ryan Specialty Group (RSG) and AmWINS are likely to be considered contenders.

Retail brokers with wholesale ambitions such as Brown & Brown have also been mentioned as potential suitors.

All Risks describes itself as the largest independent wholesale insurance brokerage firm in the US.

It is thought that the firm generates in the region of $200mn of revenue from the $2bn+ premium volume that passes through its wholesale and underwriting businesses.

With an Ebitda margin likely to be somewhere around 30 percent, that would suggest a rough Ebitda estimate of $60mn.

There is anecdotal evidence that live deals that had not been signed ahead of the coronavirus outbreak have been repricing lower amid the market turmoil, dimmed economic outlook and uncertainty over availability of credit.

Sources said a potential selling price for a scaled and mature platform such as All Risks could still be in the $600mn to $720mn range at a relatively conservative 10-12x Ebitda, or $840mn to $960mn at a frothier 14-16x Ebitda.

All Risks was formed in 1964 as an excess and surplus lines facility and has grown to over 875 professionals in 27 locations across the US.

According to its website it has an annual growth rate of 18 percent.

Its wholesale brokerage business is structured across a wide range of industry verticals, with the ability to place coverage across property, casualty, professional liability, accident and health and workers compensation lines of business.

The firm also has a substantial national specialty programs unit that writes and administers over 35 programs and is run by Chris McGovern, who set up the operation in 1995.

Cortezi joined All Risks in 1987 and was promoted to CEO in 1999. Nichols joined in 2000 as branch manager of the firm’s Southeast operations and rose to become president in 2004.

Wholesale appeal remains strong

The appeal of acquiring the fourth largest US wholesale broker is likely to be significant, both within the sector and at retail brokers looking to build out wholesale platforms.

AmWINS and RSG have both been active acquirers in the last few years, but CRC was on a pause from M&A last year as its banking parent BB&T worked on its merger with SunTrust to form Truist.

With the deal closing late last year, CRC is now known to be eying opportunities on the M&A trail as it looks to continue its growth trajectory and its parent aims to increase the proportion of overall revenues at the combined entity coming from fee generating insurance business.

Meanwhile, Brown & Brown has been looking to build out its wholesale platform organically and through acquisitions. The unit accounts for only 13 percent of annual revenues at the Florida-based firm compared to 57 percent from retail and 22 percent from national programs.

A sale to another wholesaler would also further consolidate the top ranks of the sector that have seen a dramatic increase in the size of wholesale intermediaries in the last decade.

Growth of the largest wholesalers has coincided with a trend for retail brokers to consolidate their wholesale panels.

Continued interest in the wholesale space comes after a record year of growth in 2019 as the channel was flooded with submissions from retail brokers looking for capacity as admitted or standard lines carriers retrenched.

Market sources have said in recent weeks that they remain bullish over prospects for wholesale brokers even with the inevitable impact of the economic slowdown on overall P&C industry exposure base and premium volume.

They have said that the fundamentals that drove record growth last year remain in place, with standard lines carriers if anything even more risk averse which is expected to continue momentum of submission flow and rate increases, even if exposure bases drop.

All Risks and Reagan Consulting did not respond to a request for comment on this article.