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Carlyle (CG) Inks Deal to Buy NSM Insurance for $1.775B

The Carlyle Group Inc. CG has inked a definitive agreement to buy NSM Insurance Group (“NSM”) from White Mountains Insurance Group, Ltd. CG will shell out $1.775 billion for the deal.

The transaction is anticipated to close in the second half of 2022. The closing is subject to regulatory approvals and other customary norms.

NSM is a preeminent independent insurance brokerage platform underwriting policies for pets, workers’ compensation, non-profit organizations, trucks and behavioral healthcare. Hence the buyout will enable CG to leverage NSM’s market-leading specialty insurance distribution platform.

White Mountains anticipates the transaction to result in a gain of $280 to its adjusted book value per share and increase undeployed capital to $1.7 billion from approximately $0.4 billion.

White Mountains management noted, “The NSM team has done a tremendous job building a market-leading specialty insurance distribution platform. It has been our pleasure to partner with them along the way.”

Management at NSM commented, “Together, we achieved strong organic growth, completed six strategic acquisitions, added high quality talent and built a specialized, diversified and scaled insurance distribution platform. We could not be happier with this outcome and are excited to partner with Carlyle as we embark on NSM’s next stage of growth.”

Per CG management, “Leveraging Carlyle’s deep experience supporting companies in the insurance services sector, we are thrilled to partner with NSM’s exceptional founder-led management team to help the business execute numerous upside growth drivers, including continued operational improvement, accretive M&A opportunities, and strategic investments in technology and data & analytics.”

In late March, Carlyle, through his newly-formed insurance advisor, Carlyle Insurance Solutions Management LLC, struck an advisory agreement with reinsurer Fortitude Re. This will advance Carlyle’s Insurance Solutions strategy and offer the companies leadership in the insurance industry space.

Per the agreement, Carlyle will provide Fortitude Re with merger and acquisition, transaction origination and execution, capital management services, and other growth opportunities. For these services, Carlyle will be paid a fee based on Fortitude Re’s general account assets and overall profitability.

The company expects the agreement to increase its Global Credit segment’s fee-earning assets under management (AUM) by $50 billion and incremental annualized fee-related earnings (FRE) by $50 million, beginning immediately. As Fortitude Re delivers on its growth strategy, Carlyle’s fee-earning AUM and FRE are expected to rise further. If Fortitude Re continues its expected growth trajectory, Carlyle anticipates the advisory deal to more than double the FRE generated by the deal by 2025.

Currently, Carlyle carries a Zacks Rank #3 (Hold). Over the past year, shares of the company have declined 18.1% compared with the 8% fall recorded by the industry.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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