AmWINS grows top line by 27% to $1.4bn

Wholesale broking giant AmWINS grew revenue by 27 percent to an estimated $1.4bn last year as surging organic growth of around 16 percent was supplemented by four acquisitions, The Insurer can reveal.

The organic growth rate is the latest example of the boom being enjoyed by the major wholesalers and represents an acceleration of the 10.6 percent uplift in underlying revenues the Charlotte, North Carolina-based firm saw in 2018, according to S&P data.

The 16 percent organic growth rate for 2019 is understood to have been a record for AmWINS, which has a growing MGU platform as well as international operations that include London-based intermediary THB in addition to its core transactional wholesale brokerage business in the US.

Overall revenues of around $1.4bn for 2019 are thought to be split 45 percent in transactional wholesale, 26 percent in underwriting including the MGU program business platform and small commercial specialist AmWINS Access, with the rest derived from the firm’s specialty benefits segment and international segment.

AmWINS’ transactional wholesale business led the way in organic growth, with an expansion of more than 20 percent in underlying revenues.

Organic growth was driven by a combination of rate increases and the increased volume of business flowing into the channel from standard lines carriers retrenching and retail brokers turning to their wholesale partners for solutions.

As previously reported, submission flow into the wholesale channel has been at record levels leading intermediaries to hire additional resources to handle the increased volume.

The top line growth rate at AmWINS is well ahead of the high-single digits forecast by ratings agency S&P in a note last August that factored in an assumption for organic growth of 5-7 percent.

The firm is the biggest wholesaler and places more than $17bn of premium volume annually, with 5,400+ employees over 118 locations in 31 states and 12 countries.

AmWINS is understood to have invested in hiring staff to meet the wave of demand, as well as its ongoing investment in technology to improve its infrastructure and capabilities and more efficiently meet the ever growing needs of its retail clients.

The firm has also been taking steps to continue to build exclusive capacity and product offerings for retail brokers to counter some of the challenges presented by an underwriting sector that has significantly tightened its appetite over the last 12 to 18 months.

Sources said that despite the capacity difficulties that have faced many brokers and MGUs in the transitioning market, AmWINS had been able to add capacity to its internal property cat facility Special Risk Underwriters (SRU) in 2019.

M&A also drives growth

As well as a record organic growth year, 2019 was the biggest M&A year in AmWINS history, based on the size of the four deals it completed.

Acquisitions included healthcare and benefits agency LISI, and third-party administrator CoPower which focuses on the same segment, as well as medical stop-loss insurance specialist Stealth Partner Group.

The acquisitions mean that AmWINS’ benefits division now contributes around 20 percent of total group revenues.

As previously reported, P&C acquisitions include wholesaler and MGA Atlantic Risk Specialists.

The Insurer first revealed AmWINS had agreed to buy Atlantic Risk Specialists as a bolt-on acquisition back in May last year.

AmWINS also completed its acquisition of The Flood Insurance Agency in March last year.

Sources suggested that after an active 2019 for M&A, the pipeline for 2020 is likely to be smaller as the firm focuses on integrating its recent acquisitions and driving further organic growth on its existing platform.

AmWINS is owned by San Francisco-based Dragoneer Investment Group with a 35 percent stake and Canada’s PSP Investments with a 30 percent stake. The rest of the company is owned by employee shareholders.

The wholesale giant is now led by Scott Purviance as CEO, who took over from Steve DeCarlo in 2018. DeCarlo, who was the CEO when AmWINS was founded in 2001, is now executive chairman.

Growth fuels $500mn dividend

AmWINS employee shareholders and external backers Dragoneer Investment Group and PSP Investments benefited from the firm’s continued revenue and earnings growth trajectory in the form of a $500mn dividend paid in January.

Late last year the broker announced an add-on to first line debt and unsecured notes of $250mn each to finance the payout to investors.

It noted that increasing each debt tranche by $250mn would take the combined total to $2.36bn.

In a December note, S&P said it expects AmWINS to use the proceeds to pay a dividend, which would be the second in consecutive years and is supported by “strong performance” in 2019, with organic growth at that time estimated at 16 percent and Ebitda for the last 12 months of $400mn.

The ratings agency in a previous note had said that it expected AmWINS to maintain stable margins of 28-31 percent.