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Nexus agrees duo of acquisitions

  • Publish Date: Posted almost 7 years ago

Independent speciality managing general agency (MGA) Nexus has agreed to acquire two MGAs in the last week as it continues on its growth path.

On 19 July, it was announced that Nexus had agreed to acquire US personal accident treaty reinsurance MGA Zon Re. Separately, the firm said on 17 July that it had agreed to purchase Lloyd’s coverholder Equinox Global and all other Equinox group companies.

These deals represent Nexus’ second and third acquisition of this year. In June, the company acquired Lloyd's coverholder and marine cargo specialist Vectura Underwriting from Aquila Underwriting.

Zon Re is a management owned reinsurance underwriting manager founded in 2003 and is run by Kieron Farrelly (executive vice president and chief underwriter), Chris Holland (vice president and senior underwriter) and Vern Ismen (senior vice president and compliance, claims and contracts).

Zon Re produced gross written premiums (GWP) of $14.3mn in 2016, revenue of $3.77mn and EBITDA of $2.69mn.

This acquisition of ZON Re marks London-based Nexus' first in the US, and adds treaty reinsurance as a new class of business to the group. The terms of the transaction were not disclosed.

Meanwhile Equinox, which was established in 2009, is a trade credit MGA that is majority owned by management and staff, with Beazley owning 37 percent.

Following the acquisition, Equinox’s founding shareholders and management team of Steen Parsholt, Mike Holley, Rob Crampton and Vicki Harrison will continue to support the business.

Parsholt will remain as chairman and Holley as CEO of Equinox, with the founders of Equinox and Beazley becoming shareholders in Nexus.

The combination of the two businesses will result in Nexus having a global trade credit insurance business with £60mn of GWP.

Furthermore, Beazley will continue to provide underwriting capacity to Equinox through a 10 year underwriting support agreement.

Thompson said Beazley offering a 10-year capacity commitment "speaks volumes" about the quality of Equinox's underwriting and management.

Importantly, Equinox and Nexus CIFS’ books of business are complementary, with very little overlap, both in terms of line sizes and geographical focus, resulting in significant opportunities to expand globally by harnessing the joint distribution channels following the transaction,” he added.

Combined, Zon Re, Vectura and Equinox will add GWP of £40mn and Ebitda of £4mn to the Nexus Group in 2017, along with three additional countries and 10 new branches to its footprint.

Furthermore, these acquisitions will increase Nexus's financial forecasts for 2017 with projected GWP rising to £160mn, forecasted commission income increasing to £30mn and an anticipated EBITDA in excess of £11mn.

Last week, Nexus announced that it had completed a £30mn capital raise that will enable it to undertake further M&A activity.

Venture capital provider BP Marsh & Partners – which has an 18.6 percent stake in Nexus - provided a £4mn loan facility to the MGA, while a further £26mn loan facility was provided by global investment firm HPS Investment Partners.