Acrisure closing in on Appalachian Underwriters acquisition

Acrisure is close to a deal to buy Appalachian Underwriters as it wastes little time in executing on an MGA buildout strategy that was kickstarted last week with the acquisition of several SUNZ entities, The Insurer understands.

According to multiple sources, the Oak Ridge, Tennessee-based firm has been in talks with fast-growing fintech and global insurance intermediary Acrisure and a transaction could be agreed and announced in the coming days.

Appalachian Underwriters is among the larger of the remaining mid-sized independent MGA platforms and is thought to have a book of around $500mn in gross written premium with Ebitda in the $15mn range.

The move to sell to Acrisure is understood to have come after Appalachian Underwriters explored options earlier this year for a potential SPAC IPO combination with a tech company.

The MGA was founded 25 years ago and is led by Bob Arowood as president along with his brother Bill Arowood as principal. The Arowood brothers – along with their parents who started the business – are understood to be the majority owners of the firm.

The firm has a strong focus on workers’ compensation business as well as a range of commercial specialty and personal lines offerings and a brokerage division.

With a slowdown in the broader workers’ compensation sector in recent years, Appalachian Underwriters is thought to have been more significantly growing its personal lines and commercial binding authority businesses.

Earlier this year it added life insurance to its growing portfolio of offerings after partnering with insurtech Ethos.

It has also been investing in the digitization of its platform and has been working on the launch of AUI Digital, which Arowood described earlier this year as a “new and improved way for our agents to provide the best coverage possible in the simplest and quickest way imaginable”.

In December 2020 it added William Chambers from Hiscox USA as director of digital partnerships shortly after announcing it was working on digital, on-demand products with Slice Labs.

MGA platform buildout

For Acrisure, the Appalachian Underwriters acquisition would represent the continued rapid execution of its MGA platform buildout strategy.

Earlier this month (21 December) the Greg Williams-founded and led company announced it had bought the MGA and third-party administrator operations of SUNZ Insurance.

As this publication reported, the move is part of a strategy to build out an underwriting platform using the technology it has been integrating group-wide to underwrite and transfer business aggregated from its agencies to (re)insurance capacity providers.

As it unveiled the SUNZ acquisition, Acrisure said the deal would be followed by a number of other related and complementary additions to the platform.

The pipeline of other acquisitions points to the build-out of the burgeoning MGA platform to cover a broader range of business lines and insurance segments.

This publication previously learned that the group’s reinsurance intermediary arm, Acrisure Re, has been slated to play a key role in the initiative as its parent executes a strategy it has been trailing for the last couple of years as it has continued to grow at a rapid pace through its agency roll-up strategy.

Although he wouldn’t go into details on the MGA platform structure or potential acquisitions, Acrisure CEO Greg Williams told this publication in an interview before the SUNZ deal was announced that his firm aims to underwrite a meaningful portion of the risks that historically it would place with insurers.

As previously reported, as a result of its roll-up strategy the firm has aggregated huge volumes of insurance business, particularly in the SME space, and places in excess of $25bn of premium.

Its insurance-related solutions span commercial P&C, personal lines and employee benefits offerings, which it says are informed by industry-leading technology and distributed through its global network of agency partners.

Acrisure is expected to have completed around 136 deals in 2021 – a record for the rapidly growing company – with Ebitda for the 12 months ended 31 December estimated at just under $1.1bn on a pro forma basis and revenues that have gone comfortably past $3bn.