Acrisure raises $500m for acquisitions

Michigan-based insurance broker Acrisure is issuing $500 million of five-year senior secured notes to help fund acquisitions.

Moody's has rated Acrisure's senior secured notes B2, maintaining a negative outlook.

The agency pointed to the company's large number and dollar volume of acquisitions, its steadily rising debt burden and its persistently high financial leverage. The rapid acquisition pace heightens the management challenges of integrating critical systems, and limiting the firm's exposure to errors and omissions in its delivery of products and services, Moody’s said. Moreover, the company has large contingent earnout liabilities, which it typically funds through a combination of free cash flow and incremental borrowings, it added.

On a positive note, Moody’s said that the ratings reflect Acrisure's growing market presence in US insurance brokerage, its good mix of business across property & casualty insurance and employee benefits and its healthy EBITDA (earnings before interest, taxes, depreciation and amortization) margins. As an active acquirer, Acrisure maintains the existing brands of its acquired entities and allows them to operate fairly autonomously, while centralizing accounting, compliance and other business tracking systems, the agency explained. Acrisure aligns the interests of its many acquired entities by including significant equity in its purchase consideration, such that Acrisure management and agency partners now own more than 80 percent of the firm's equity, Moody’s added.

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