According to Reuters, a top official at Bain Capital LP said that the private equity company has successfully raised $1.15 billion for its first insurance-specific investment fund.
High-net-worth investors, institutions, and family offices helped the fund raise more than its initial goal of $750 million. Bain Capital Insurance, the firm’s specialised investing arm, will use the funds. This division was established in 2021.
The new fund demonstrates the growing interest of private equity in the insurance industry as providers strive to reduce expenses by selling off assets that may be managed and expanded by buyout companies.
The global head of Bain Capital Insurance, Matt Popoli, recently told Reuters that the new capital pool, Bain Capital Insurance Fund, will offer his 20-person team the means to invest in underappreciated middle-market insurance firms.
We take a different approach to insurance than other companies, and we have a large enough staff with the right skills to explore uncharted territory and discover growth and value creation opportunities where others haven’t looked yet.
The money will be used to build new insurance platforms and assist separate businesses within current organisations to grow independently in North America and Europe.
Popoli also announced that the fund would be investing in specialty insurance agencies that can be purchased at lower prices than their larger competitors.
He also sees potential in “hard markets,” or niches where just a few insurers remain and consumers pay a premium for coverage. The cost of reinsuring U.S. property against natural disasters, for instance, has increased by 50% this year due to the effects of climate change.
Bain has started using the money from the fund. Bain Capital acquired Mercer, a subsidiary of Marsh & McLennan Companies, Inc., and subsequently spun out the company last month under the name Aptia to focus on employee benefits and pension administration in the United States and the United Kingdom, respectively.
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