Oak Hill Capital and The Carlyle Group have combined their investments in retail broker EPIC Insurance Brokers & Consultants and wholesale aggregator JenCap Holdings under a new entity called Galway Insurance Holdings as they position the platform for further growth, The Insurer can reveal.

John Jennings and John Hahn

  • Brings together Oak Hill-owned EPIC and Carlyle-owned JenCap
  • US top-15 retail broker and number 8 wholesale distributor will operate independently
  • HoldCo will invest in multiple areas such as data/analytics, tech, reinsurance across organization
  • Carlyle had previously backed EPIC before selling to Oak Hill in 2017
  • JenCap also completes tenth acquisition with addition of Quaker Special Risks

The launch coincides with New York-based JenCap – previously Carlyle-owned – closing a deal to buy wholesaler and MGA Quaker Special Risks (see boxout below). The firm has offices in New Jersey and Massachusetts.

The creation of Galway combines the 14th biggest US retail broker in the form of San Francisco-based EPIC, with the number 8 ranked wholesale distributor JenCap, which has built a specialty distribution platform from scratch since being launched by Carlyle in March 2016.

EPIC and JenCap will continue to operate independently under the Galway structure while looking to take advantage of new growth opportunities to expand their strategic and geographic footprints.

The transaction also reunites Carlyle with EPIC, with the Washington, DC-headquartered private equity giant the majority owner of the retail broker before selling its stake to Oak Hill in 2017.

FACT FILE- JENCAP AND EPIC

With funds from the PE giants, the holding company Galway will invest in data analytics, technology, reinsurance and innovative risk sharing solutions to create a strategic advantage in a post-Covid-19 environment, said the firms in a statement.

Commenting on the tie-up, EPIC’s executive chairman John Hahn said the new structure maintains the independence of the two brokers while enabling innovation.

“We anticipate a significant paradigm shift in the way products are manufactured and distributed in the future, and the Galway structure positions us to respond. We are thrilled to be partnering again with John Redett and the Carlyle team, and to collaborate with John Jennings and his team,” Hahn added.

JenCap’s founding CEO John Jennings said the transaction will allow his firm to continue its aggressive growth plans and build “one of the most diverse wholesale platforms in the industry”.

He commented: “The ability to maintain our independent operations while engaging in a larger insurance investment opportunity is very inviting for JenCap.”

The two PE firms highlighted the growth potential of combining the retail and wholesale platforms under a single holding company.

“This innovative and strategic venture lays the foundation for future successes as we continue navigating the unchartered waters of the current crisis while looking ahead. Combining forces with the Carlyle team adds to our financial strength and service offerings,” said Oak Hill managing partner Steve Puccinelli.

Carlyle managing director John Redett said, as the former owner of EPIC, his firm has an in-depth understanding of its integrated business model and “significant trust” in Hahn and his senior management team including EPIC Insurance Brokers & Consultants chairman Pete Garvey and CEO Steve Denton.

His fellow Carlyle managing director Jim Burr added: “We believe Galway has the in-house expertise and reputation to identify and source any insurance distribution opportunity and from its advantageous position, execute on any deal demonstrating a shared vision and value proposition.”

Both firms had been growing as independent entities.

JenCap was founded by former Crump Insurance Services president and CEO Jennings with the backing of Carlyle just over four years ago with a business plan to consolidate specialty insurance distribution businesses, including MGAs, program managers and transactional wholesale brokers.

It has grown rapidly over the last five years to become a top 10 player in that segment, placing over $900mn in premiums, with more than 500 employees and 30+ offices across the country.

Its business includes binding authority, wholesale brokerage and exclusive programs. Sources have said that revenues are likely to be in the $100mn-$120mn range.

Quaker Special Risks represents the tenth acquisition by JenCap since its launch.

EPIC is significantly larger than its new stablemate and has also been an active acquirer since its launch back in 2007 by Hahn in partnership with insurance-focused PE firm Stone Point Capital.

It now has run-rate revenues of $730mn, with 85 offices nationwide and 2,600 employees.

Major acquisitions include substantially all of the US operations of Integro Group in a deal that closed in February last year, followed by Prime Risk Partners late last year, adding over $115mn in revenue in a move first revealed by The Insurer.

JenCap adds Quaker Special Risks

JenCap has also agreed to buy privately-held specialty program administrator and wholesale brokerage Quaker Special Risk and Quaker Insurance Agency of Massachusetts in a deal it says cements its position as one of the largest specialty insurance distribution platforms in the US.

The deal is the tenth by JenCap since it was launched with backing from The Carlyle Group in March 2016.

Quaker, which was founded in 1960, has been led by Frank Walsh and Karin Branscombe and has offices in New Jersey, Massachusetts and Pennsylvania.

Commenting on the acquisition, JenCap’s founding president and CEO John Jennings highlighted the “comprehensive” programs and capabilities added with the acquisition and said the platform would continue to expand under its new ownership.

“The Quaker team has assembled a company offering a broad range of property and casualty programs and wholesale brokerage capabilities to retail brokers and agents, with a strong presence in both commercial and personal lines,” he said.

Walsh said: “I’m very proud of the company we’ve built over the last 60 years and believe Quaker will immediately become a key strategic component of JenCap’s national platform.”

And Quaker Insurance Agency of Massachusetts CEO Branscombe added: “We are excited about what this acquisition means for our evolving business. The partnership with JenCap gives us greater opportunity to expand our best-in-class solutions we offer our clients.”

The Quake acquisition follows last August’s deal to buy specialty program administrator Aran Insurance Services Group.