Nexus strikes ZON Re deal to enter US MGA market
Specialty managing general agent (MGA) Nexus Group has acquired the US based personal accident treaty reinsurance MGA operated by Lloyd's coverholder ZON Re via an asset purchase.
Following the acquisition, ZON Re PA treaty reinsurance MGA will trade as "Nexus Re" and will continue to be led by its senior management team of Brian Harrigan, Kieron Farrelly, Chris Holland and Vern Ismen, who will become shareholders in Nexus.
The deal marks Nexus’s first foray into the US MGA market, and adds treaty reinsurance and a new class of business to the group. ZON Re’s Treaty Reinsurance MGA alone will add EBITDA in excess of $3 million to the Nexus Group in 2017.
This is the third recent acquisition for Nexus following the purchase of Equinox Global and Vectura Underwriting. Combined, these three acquisitions will add GWP of £40 million and EBITDA of £4 million to the Nexus Group in 2017, 3 additional countries and 10 new branches to its footprint, a number of profitable product lines.
Colin Thompson, founder and executive chairman of Nexus, said: "Following on from the successful conclusion of Nexus’ capital raising process last week, ZON Re’s Treaty Reinsurance MGA fits the model of profitable, proven, niche MGAs, that we plan to target with our 'buy and build' strategy, which will deliver significant EBITDA and value to the Nexus group.
"Our revised financial forecast including all recent acquisitions, will mean that we will have reshaped our business to be one that delivers £160 million of GWP, and actual income of £30 million and actual EBITDA of greater than £11 million in 2017. On a pro-forma basis, our 2017 EBITDA will be £15 million and there will be more acquisitions to follow," Thompson added.
Harrigan, non-executive chairman of Nexus Re, said: "We are excited to add our PA Treaty Reinsurance MGA to the Nexus global underwriting platform and look forward to maximizing value for all shareholders as part of the Nexus family."
Farrelly, chief executive officer of Nexus Re, added: "We are pleased to be joining Nexus and bring our Treaty underwriting expertise for Personal Accident Reinsurance following a long and successful run under the ZON Re banner. Our core team and support staff remains intact so that we can maintain continuity as we grow the portfolio with our current panel of risk partners."
"Whilst ZON Re’s PA Treaty Reinsurance MGA has been acquired by Nexus, ZON Re will continue to operate a nationally licensed insurance agency and fully digital Third Party Administrator (TPA) platform under its current brand," Farrelly said.
Harrigan was formerly president and CEO of United Insurance Companies. In addition to continuing operations of ZON Re’s digital TPA, he oversees Group Benefit Options and Insur IQ.
Farrelly has previously held senior management and chief underwriting positions with Duncason and Holt, Aon Benfield and ZON Re – USA.
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