Atlanta-based MGU and Lloyd’s coverholder Risksmith has been looking to bring in an investor as it seeks to infuse capital into the business, Inside P&C has learned.
Sources said that the specialty underwriter retained boutique firm Insurance Advisory Partners as an adviser earlier this year.
It is understood that the program manager has been open to both strategic bidders and institutional capital through either a majority stake sale or a minority deal.
Sources expect the process to likely conclude in a strategic deal.
Founded in October 2017 by former Technical Risk Underwriters executive Ryan Scheinfeld, the firm provides commercial property, construction and inland marine, and lawyers professional liability coverage.
In 2018, the company entered the marine and real estate segments after hiring Chadd Folkes from Sompo International.
Risksmith’s is the latest in a string of MGA strategic processes that includes those of Century-backed Doxa Insurance and Arch-owned Castel.
Last month, Inside P&C revealed that the first round of bids for Doxa was due in late September, in a process that was launched earlier this year after attempts to reach a bilateral deal fell apart.
MGAs remain one of the hottest, highest-valued segments in the insurance sector, although the space has not been immune to the increased cost of capital.
As interest rates have ticked up, multiples have come in a turn or two since White Mountains sold NSM to Carlyle in May last year for $1.8bn at an 18x multiple. In December 2022, K2 had a ~16x-17x valuation in its sale to Warburg Pincus for $1.25bn.
As this publication has discussed in past months, macro conditions are putting MGA valuations under pressure and challenging the segment’s structural advantages, setting the stage for a slow squeeze.
Risksmith did not respond to a request for comment.
