Nexus targets aggressive M&A growth

Nexus Group is eyeing future M&A deals to diversify and strengthen its managing general agency (MGA) portfolio after its recent acquisition and rebrand of a reinsurance treaty MGA from ZON Re, which it renamed Nexus Re, founder and executive chairman Colin Thompson told Monte Carlo Today.

The deal was finalised in July 2017, with Nexus acquiring via asset purchase the personal accident treaty reinsurance MGA from ZON Re.

“A treaty reinsurance MGA is quite an unusual and rare beast; not many of them exist,” said Thompson.

Nexus is continuing its M&A growth strategy, and is considering one or two other treaty MGAs that it could bolt on to Nexus Re in the future.

The group is looking to expand its territories in North America, with the US, Canada and Central America in mind. It underwrites £200 million ($263 million) of business a year across eight countries.

Nexus started growing by way of M&A in 2012, and since then has acquired eight other MGAs.

The group has raised a substantial amount of money to fund these acquisitions, and has commitments to more funding.

“We wanted to diversify and grow the business, by bringing in portfolios that are fully developed and mature as opposed to making hires and hoping it works out,” Thompson said.

Whereas many of its competitors have grown organically, Nexus views this M&A strategy as a more stable method of growth.

“The reality is that a lot of MGAs fail,” Thompson said. “We’d rather acquire MGAs that are established and have been through those ‘rough patches’, have developed their business and are successful in their own right.”

Going forward, Nexus Group plans to continue its aggressive M&A strategy, acquiring at least three MGAs per year for the next five years.

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