San Diego, CA–(BUSINESS WIRE)– San Diego-based managing general agency (MGA) K2 Insurance Services, LLC (K2) has acquired a majority stake in Midwestern Insurance Alliance, Inc. (Midwestern), an MGA based in Louisville, Ky. that underwrites workers’ compensation coverage, with a focus on the transportation industry.
The investment is the first for K2, formed in 2011 to invest in other MGAs and build a national insurance program business franchise.
MGAs sell insurance coverage to their clients, but differ from other agents and brokers in that they are authorized by insurers to actually underwrite and bind risks, typically in “programs” specializing in certain coverages and industries. While they underwrite and provide services to policyholders, their insurance company markets bear the financial exposure of the insurance products.
With the added capital support, Midwestern will expand its territory to 17 states, including Texas and California, which, according to K2 President Bob Kimmel, are currently underserved markets for workers’ compensation insurance for trucking firms.
“We formed K2 to invest in successful MGAs so that we could leverage their expertise and build on their relationships with insurers,” Kimmel said. “We are very fortunate that our first investment is in a company with the track record and industry reputation of Midwestern Insurance Alliance.
“Midwestern has a strong management team, proven expertise in underwriting and claims handling, and a customer-focused culture,” Kimmel added. “And, it has a profitable partnership with one of the world’s leading insurers.”
Formed 52 years ago, Midwestern has underwritten business on behalf of the same A-rated carrier for the past 16 years. Midwestern Chief Executive Officer Norman E. Risen said the investment opens a period of expanded opportunity for the firm.
“As we expand into the California market and several other states, we’re excited to be partnering with K2, a firm whose leadership team has great track records,” Risen said. “With that partnership, and our stable carrier relationship, we look forward to new successes in the future.”
With annual gross written premiums of $35 million, Midwestern previously underwrote business in Arkansas, Georgia, Indiana, Kansas, Kentucky, Missouri, South Carolina and Tennessee. In addition to California and Texas, its expanded territory now also includes Alabama, Nevada, Utah, Louisiana, Mississippi, North Carolina and Virginia.
Kimmel cited a recent survey by reinsurance broker Guy Carpenter & Co. of specialty program insurers, who indicated they expect the market for managing general agents to expand this year. He said Midwestern intends to be in the forefront of that growth, beginning in the western United States and eventually expanding to become a national workers’ compensation underwriter.
Terms of the agreement were not disclosed.