American International Group Inc. has agreed to acquire a controlling stake in NSM Insurance Group, a managing general agent and insurance program administrator, from ABRY Partners and NSM management.
Terms of the deal were not disclosed. The transaction is expected to close within the next 30 days.
NSM Insurance Group administers insurance programs. It has been managing certain insurance programs for AIG for years and will continue to do so, while continuing to manage third party programs, according to the announcement.
AIG said its investment was executed through a non-operating holding company, NSM Investments Inc.
Robert Schimek, AIG senior vice president and CEO of the Americas, praised “NSM’s track record, highly innovative approach to program structuring, and strong reputation.”
NSM Insurance Group is located in Conshohocken, Pennsylvania, and employs 300 people across nine regional offices.
Geof McKernan, CEO, NSM Insurance Group, said AIG brings to NSM “strong financial backing and A+ rated paper which will power our acquisitions and internal growth plans. Ultimately, AIG’s investment enables us to continue to be an entrepreneurial organization and to seek new opportunities and programs.”
In 2013, NSM partnered with private equity firm ABRY Partners to help fund its acquisition strategy.
In January 2014, NSM acquired American Collectors Insurance in Cherry Hill, N.J., a provider of specialty insurance for collectibles and collector vehicles. Last October, it added Specialty Aviation Underwriters (SAU), located in Addison, Texas. In 2013, NSM picked up Executive Liability Managers Insurance Brokers (ELM), a professional liability wholesale insurance brokerage.
According to 2014 survey by the Target Markets Program Administrators Association (TMPAA), the program segment is growing. Premiums grew by 9.8 percent in 2013, reaching $30.1 billion for the year, the group’s most recent survey showed.
Carriers already involved plan on offering additional program and more carriers are also eyeing entry into the program segment, according to a recent report on program business in Insurance Journal.
Marc Willner, executive vice president, Ironshore Programs, told Insurance Journal that program business is a way for carriers to generate new business – often times business it typically would not handle.
“There is certainly more interest from carriers in the marketplace as providers of capacity for programs. They are looking at various ways to supply that capital and get into classes that they want to get into, where the carrier may not have the production capability with agents or wholesalers or the carrier doesn’t have the full underwriting staff to handle the business,” Willner said.
According to the TMPAA survey, the program segment is also experiencing heightened merger and acquisition activity, with 14 percent of program administrators having been soldin the past three years.