By James Thaler

March 14 - Goldman Sachs-backed World Insurance Associates (WIA) said on Friday that it has no plans to divest of wholesaler Novatae, which it said remained a “vital part” of its platform.

Novatae was established in November 2022 when WIA consolidated and rebranded its seven separate wholesale operations under a single banner. Later that month, it announced that it had acquired Dallas-based MGA and wholesale broker MarketScout and installed the acquired firm’s leader Richard Kerr as Novatae CEO.

"The rumor that World Insurance Associates is exploring selling Novatae Risk Group is categorically false,” WIA CEO Rich Eknoian said in an emailed statement to The Insurer.

“We established Novatae in 2022 because we understood the growing importance of the E&S market, and that belief has only been strengthened by recent events,” Eknoian said, adding: “We’re going to continue to grow Novatae as a vital part of World.”

Novatae operates as a full-service wholesale insurance brokerage, MGA and program manager offering products and services including property, casualty, workers' compensation, cyber, professional, management, construction, environmental, garage, inland marine/ocean marine and contingency.

Kerr has previously publicly said that the wholesale outfit handled around $800 million in premium volume in 2022 and had ambitions to reach $2 billion within three years, although exact current premium volume figures could not immediately be confirmed.

Despite some moves by large distribution firms to split up retail and wholesale operations, sources familiar with WIA’s thinking said that the firm believes strongly in combining retail-wholesale businesses under a single platform.

In August 2023 Goldman Sachs Asset Management made a more than $1 billion investment in WIA that saw its managed funds come in alongside existing backer Charlesbank Capital Partners in a transaction that gave the US retail broker a $3.4 billion enterprise value.

WIA has also been among the most acquisitive privately-held so-called 'roll-up' broking firms. Data from Optis Partners this past January showed it struck 225 deals over the last decade, making it the seventh-most acquisitive firm in that timeframe.

With elevated interest rates and tighter costs of capital, as well as privately-held firms racing to integrate in order to participate either in the IPO market or in large-scale consolidation, the brokerage M&A league tables have shifted, as some firms have dialed back on acquisitions.

Data from Optis shows that WIA was tied as the sixth-most acquisitive broker in 2024, having done 16 deals, which was a 56% drop off from the 28 deals it did in 2023.

Meanwhile the number of deals done by Acrisure last year plunged by 70%, compared to a 52% drop off for PCF, now known as Trucordia, and a 44% decline in the number of deals done by AssuredPartners.

Data from boutique investment banking firm MarshBerry pegged the number of deals WIA did in 2024 at 24, making it the ninth-most acquisitive firm and representing a 2.8% increase in its deal volume versus 2023.

Last year saw a slowdown in total North American agent and broker M&A deal flow but a pick up in large-scale transactions.

In its most recent report on the sector, Optis Partners predicted further activity in the next 12 to 24 months involving larger-scale M&A.

The Insurer broke the news that newly-independent wholesaler CRC Group is in active talks to acquire its fellow Stone Point-backed intermediary ARC Excess & Surplus.

CRC’s wholesale rival Ryan Specialty has been especially active in the last two years, having acquired Innovisk Capital Partners, US Assure, Velocity Risk Underwriters, and Ethos’ property and casualty business from Ascot in the last nine months, among others.

A pickup in specialty distribution deals also follows major consolidation among retail firms, after The Insurer broke the news last month that Arthur J Gallagher was close to a deal for Woodruff Sawyer, which was announced as a $1.2 billion transaction earlier this month.

In addition to Gallagher’s $13.5 billion deal for AssuredPartners, The Insurer broke the news in December 2023 that Aon would be acquiring middle market specialist NFP and was the first to report that TIH Insurance was entertaining offers for retail intermediary McGriff.

McGriff was ultimately sold to Marsh in November in a $7.75 billion deal.

Howden also remains in active deal talks for its long-expected entry into US retail broking, with Boston-based Risk Strategies parent Accession Risk Management Group among the parties with which it is currently engaged.