Growth-focused middle market private equity firm, Lee Equity Partners, LLC has agreed to acquire a majority ownership in specialty insurance services holding company, K2 Insurance Services.
K2 owns and controls 14 managing general agents (MGAs) that operate in the property and casualty sector. The firm’s senior management team, which is led by Bob Kimmel as President and Chief Executive Officer (CEO), will continue to lead K2 while retaining a meaningful stake in the company.
Financial terms of the deal, which is expected to close in the second-quarter of 2019, were not disclosed.
The definitive agreement between the two companies also sees K2’s specialty insurer, Aegis Specialty Insurance Company, split from K2 and remain under the ownership of Endeavour Capital and Patrick Kilkenny.
K2 is based in San Diego, California, and each of its 14 MGAs serve a unique, niche insurance end market. In aggregate, the company’s program managers underwrite more than $650 million of specialty insurance premiums.
Commenting on the deal, Kimmel said: “Since our founding in 2011, K2 has become one of the fastest growing and largest program managers in the U.S., 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.”
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 revolutionizing the insurance sector by leveraging technology to achieve unparalleled operational efficiencies and deliver superior underwriting performance.”
Since its inception, K2 has recorded solid growth, expanding its business across numerous specialty lines while growing its network of diverse, loyal distribution partners, insurance carriers and reinsurers. It’s hoped that with the support of Lee Equity, K2 will continue down its impressive growth path.
Daniel Rodriguez, a Partner at Lee Equity, added: “We believe K2 will accelerate its already impressive growth trajectory as K2’s specialization, diversification, and its tech-enabled end-to-end operating platform will continue to attract top quality underwriters to join K2.”
During the past ten years, Lee Equity has invested and committed roughly $1.7 billion in over 20 lower middle market companies, and 50 add-on acquisitions.