The hunter of brokerages in Canada has now become the hunted.
Global private equity firm Hellman & Friedman LLC has entered into an agreement to acquire Hub International Limited (Hub), a global insurance brokerage that has been active in acquiring Canadian brokerages over the past few years.
The transaction values Hub at approximately $4.4 billion.
Investment funds managed by Hellman & Friedman will hold a majority interest in the company, while members of Hub’s senior management will continue to have a significant equity position. Operationally, the deal changes nothing at Hub International, Hub’s chairman and CEO Martin Hughes told Insurance Business.
“I did a lot of due diligence on them,” Hughes said of Hellman & Friedman, which has raised and managed over $25 billion of committed capital since its founding in 1984. “I love the way they partner with firms. They weren’t looking to make changes to the organization.
“They asked me what I would like to see our legacy be 10 years down the road.
"And I said, ‘You know what? We have a really good business plan, we’ve executed on it really well, and I really wouldn’t want to change it.’ And the response was, ‘That is exactly what we hoped you would say.’” (continued.)
Hub employs more than 6,500 people in the United States (including Puerto Rico), Canada and Brazil. It is expected to achieve revenue of approximately US$1.2 billion in 2013, after the annualized impact of acquisitions.
“We have long admired Hub and are delighted to partner with Marty and the entire Hub team," said David Tunnell, managing director of Hellman & Friedman. “Our firm has a longstanding history of investing in insurance businesses and we look forward to working with the company to support its next phase of growth.”
Hellman & Friedman’s previous insurance transactions include reinsurer PartnerRe Ltd. and Sedgwick Claims Management Services Inc., and previous insurance deals include reinsurers Arch Capital Group Ltd. (ACGL) and GeoVera Insurance Group.
“This is the first time they are venturing into brokerage ownership so it will be interesting to see what if anything will change over the next few months,” said Randy Carroll, CEO of the Insurance Brokers Association of Ontario (IBAO).
But other than having a solid base of capital behind it for the next few years, not much is expected to change at Hub International after the acquisition, according to Hughes. He said the brokerage didn’t view the acquisition with Hellman as a means to do something that Hub hasn’t done before.
“We’re in just about anything you can imagine anyways,” said Hughes. “We’re in the P&C business, we’re in the personal lines business, we’re in the employment benefits business, we’re in the wholesale business. You’d have to think of this as a lateral move.”
