US MGA business K2 Insurance Services has agreed to take on Pioneer Underwriters’ four remaining underwriting teams.
The transaction will form the foundation for K2’s international expansion and covers Pioneer’s property cat reinsurance, financial institutions (FI), international property fac and marine specialty businesses, which together will write £150mn ($195mn) in gross written premium (GWP) in 2020.
Sister publication The Insurance Insider revealed in mid-January that Pioneer was in sales talks with K2, Ardonagh and Nexus as its management sought to save what remained of the firm.
K2 is an expansive California-based MGA platform founded by ex-Arrowhead CEO Pat Kilkenny and former Guy Carpenter executive vice president Bob Kimmel.
Since its inception in 2011 it has bought a range of US specialty insurers and MGAs. It was acquired last year by Lee Equity Partners at a multi-hundred million valuation, and has previously signalled its appetite to grow rapidly via M&A.
Pioneer will be K2’s first acquisition outside the US. The terms of the in-principle deal were not disclosed.
The agreement marks the latest development in what has been a tumultuous period for Pioneer. The MGA exited a succession of lines of business after weak underwriting results and was forced to close its Lloyd’s syndicate in November amidst a capital shortfall.
In a statement, Pioneer’s board said that the K2 transaction offers an opportunity to build on the business’s strengths as market conditions improve.
Pioneer CEO Andrew McMellin said: “K2 is a highly successful business in the US and its vision of building a broad, high quality and service-driven group of expert underwriting businesses, now with an expanding international focus, has clear appeal for our underwriting teams and support staff, as well as significant benefit for our customers and capacity providers.”
Kimmel also said: “Pioneer’s underwriting leadership have the skills, customer commitment and capital relationships that are an excellent fit for K2.
“We look forward to working closely with them as we build an international distribution platform to complement our successful existing US business.”
The transaction is expected to close in the coming weeks and is subject to due diligence and approvals.
