Insurance Industry Veterans Establish New Managing General Agency

SAN DIEGO, Aug. 8, 2011 /PRNewswire/ -- Two veteran insurance industry executives – Pat Kilkenny, former Chairman and CEO of Arrowhead General Insurance Services, Inc., and Bob Kimmel, former Guy Carpenter & Co., LLC executive vice president – have formed K2 Insurance Services, LLC, a managing general agency (MGA) which seeks to acquire other MGAs and build a leading franchise in the insurance program business market.

Kimmel is president of the new firm and Kilkenny, who sold his interest in Arrowhead in 2006 after he had built it to over $1 billion of premium, serves as chief executive officer.  The company is funded by Kilkenny, Kimmel and Endeavour Capital, a leading West Coast-based private equity group with more than $1 billion of committed equity capital under management.

Kilkenny said K2 will consider a variety of MGAs as possible acquisition opportunities, including large, existing entities with diverse books of business, as well as smaller MGAs that may specialize in programs that focus on single lines of business or customer segments.  The company will seek potential opportunities in all lines of business and all geographical areas. Additionally, the company will be developing new programs with experienced underwriters in niche insurance segments.

Kimmel said the new company has a different rationale than that of insurers, reinsurers and other firms that, in recent months, have acquired MGAs merely as a means of growing in a soft commercial insurance market.  

"We believe the insurance market is beginning to turn, and the timing is very good for our venture," Kimmel said.  "Programs written by good MGAs will present new business opportunities for growth and diversification in the near future. We will be using our experience and relationships to help these businesses grow, not just buying premium."

Advantages for MGAs

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.  While they underwrite and provide services to policyholders, their insurance company partners bear the financial exposure of the insurance products.  Kimmel said that most MGAs which K2 will acquire already have such relationships with insurers or reinsurers.

"We would not necessarily try to change such relationships, but would hope to build on them," Kimmel said.  "If MGAs are seeking additional insurance partners, we have relationships with executives throughout the industry worldwide, and can help MGAs by bringing them new underwriting capacity."

Kimmel said K2 will offer additional advantages to other MGAs.  "Many MGA owners plan eventually to sell their firms," Kimmel said.  "Having worked with many MGAs over the years, we know how to help owners think about and manage their short- and long-term succession plans.

"In other cases, MGAs specialize in programs that focus only on one line of business or customer segment," he added.  "By adding those programs to the overall business of K2, those MGAs can benefit from the diversification of our firm."

About the principals:

• In his most recent position at Guy Carpenter, Kimmel was responsible for program business written by MGAs. Prior to that, at broker John B. Collins Associates, Inc., Kimmel was co-leader of sales and service for the U.S. broking division.  He began his career as a reinsurance intermediary with E.W. Blanch Company in 1991.
• Kilkenny acquired Arrowhead Group in 1984, when it wrote one product line: nonstandard auto.  By the time he sold the company in 2006, it recorded $1 billion annually in net written premiums, with program business in commercial, personal and specialty lines of business.  After selling Arrowhead, Kilkenny became athletic director of the University of Oregon, a position he held until June 2009.
• Endeavour Capital was founded in 1991 to be a flexible and long-term partner to leading companies and management teams in the Western United States. Today, Endeavour is investing its fifth equity fund, and has offices in Portland, Seattle, Los Angeles and Denver.  Endeavour targets companies in five primary industry areas, including: insurance services, food, transportation and logistics, education and training, and niche manufacturing.  Additional information is available at www.endeavourcapital.com

SOURCE K2 Insurance Services, LLC