Michigan-based Acrisure, one of the top 15 insurance brokerages in the US, is reportedly exploring a sale that could value it at as much as US$2bn.
A report by Reuters on Tuesday said that Acrisure’s owner, private equity firm Genstar Capital, has hired investment bank Evercore Partners to run an auction for the brokerage.
Genstar Capital acquired Acrisure in February 2013, as a Midwest-focused retail insurance brokerage, with risk management and consulting solutions, including property & casualty, employee benefits, human resource outsourcing, loss & claims management, surety bonding and personal lines coverage.
The company generated revenue of US$231m for the 12 months through September 2015.
Moody's Investors Service recently noted that the company has announced plans to increase its credit facilities by US$150m to help fund nearly 30 small acquisitions expected to close by early 2016.
But the rating outlook for Acrisure remains negative, Moody’s said, reflecting the accelerated pace of acquisitions, funded largely with debt, and the meaningful execution and contingent risks associated with such an aggressive growth strategy.
"Acrisure has substantially increased its borrowings to help fund acquisitions," said Bruce Ballentine, Moody's lead analyst for Acrisure. "The persistently high financial leverage gives the company little capacity to withstand disruptions in its existing or acquired businesses."
Acrisure's ratings reflect its growing market presence in North American insurance brokerage, good mix of business between property & casualty insurance and employee benefits, healthy EBITDA margins and effective use of stock to help fund acquisitions. These strengths are offset by the company's high financial leverage, limited interest coverage and exceptionally fast growth through acquisitions.
