Program manager K2 Insurance to be sold to investor Warburg Pincus

Independent specialty insurance program manager K2 Insurance Services, the parent and service provider to MGA’s K2 CAT and K2 Parametric, has announced that it is being acquired by global growth investor Warburg Pincus.

Warburg Pincus is set to acquire the program manager from current private equity investor and backer Lee Equity Partners, LLC.

The new investment from Warburg Pincus is seen as supporting K2’s continued growth strategy, including M&A and de-novo incubation of managing general agents.

K2 operates a diversified portfolio of 24 specialised programs, across four key segments: Specialty Commercial, Specialty Transportation, International, and Personal Lines.

K2 provides the centralised services needed to run a managing general agent (MGA), including distribution and capacity relationships, technology, actuarial, claims, and additional back-office support.

K2 Insurance Services came together with Pioneer Underwriters in 2020 and K2 International was formed, as a managing agency with a focus on London and international market specialty lines, including catastrophe reinsurance.

K2 International has been raising funds for reinsurance and possibly US retrocession & ILW underwriting in 2023, seeing an opportunity to expand in the hard market.

The other area of K2’s business that is interesting to us here at Artemis is the K2 Parametric MGA, which launched roughly a year ago.

Commenting on today’s news, K2 CEO and Co-founder Bob Kimel said, “I am incredibly proud of our achievements and growth since K2 was founded over ten years ago. Partnering with Warburg Pincus, who has a long-standing track record of cultivating world-class businesses, reflects the hard work and strong culture of our team, loyalty of our customers, and cements our position as a leading underwriting and distribution franchise in the program insurance market. We would also like to thank Lee Equity for their tremendous partnership and support over the past three years.”

“K2 is truly a differentiated platform, offering a full suite of services to a diversified portfolio of programs that are supported by deep carrier relationships. K2’s management team has extensive industry experience and a demonstrated track record of growing insurance businesses,” said Michael Martin, Managing Director, Head of Financial Services, Warburg Pincus. “As a long-term investor in the insurance sector, we believe K2 has significant growth potential and are excited to partner with Bob and the K2 team to build upon the company’s history of success and expand their offerings in this dynamic and growing market,” added Jeff Stein, Managing Director, Warburg Pincus.

“We are very proud of K2’s tremendous growth during our partnership and would like to thank Bob and the broader management team for the opportunity to partner with them and for their tireless effort that catalyzed the company’s success,” said Danny Rodriquez, Partner, Head of Financial Services, Lee Equity. “Amongst the many insurance businesses that I have had the opportunity to work with, I can confidently say that the quality of K2’s team and platform differentiates it amongst its peers to the benefit of its carrier partners, distributors, and broader stakeholder base. We’ll continue to eagerly follow the company’s success through this next stage,” Mark Gormley, Partner, Lee Equity also said.

Interestingly, Warburg Pincus has a catastrophe reinsurance and retrocession investment track-record, having been a backer of Aeolus Re.

TigerRisk Capital Markets & Advisory, J.P. Morgan and Marsh Berry & Co. acted as financial advisors for the deal.