On this episode of the Insurance Coffee House, Nick Hoadley is joined by Michael Forman, Co-Head of North America M&A and Capital Raising, and Cate Kenworthy, Managing Director, at Howden Capital Markets & Advisory.
Michael shares his career journey from insurance underwriting at Travelers into investment banking and corporate development. After completing business school, he joined Willis Capital Markets & Advisory before moving to AIG’s global corporate development team. He has now spent more than nine years with Howden Capital Markets & Advisory, advising insurance companies and investors across M&A and capital-raising transactions.
Cate’s background is in fundraising and alternative asset management. Her career has included fund-of-funds investing, macro and emerging markets, and insurance-linked securities before she joined Howden Capital Markets & Advisory in 2023. Her role focuses on educating investors and developing relationships with institutions seeking to understand and access insurance and reinsurance investment opportunities.
The conversation explores the role of Howden Capital Markets & Advisory within the wider Howden Group. Michael explains how its global team focuses exclusively on the property and casualty insurance industry, advising insurance carriers, insurance services businesses and investors across M&A, private debt and equity, new company formations and insurance-linked securities.
Michael also discusses how the team can draw on specialist expertise from across Howden and Howden Re when advising clients. Depending on the transaction, this can include actuarial, ratings, capital-modelling, broking and market expertise, while maintaining the required regulatory and information controls.
Cate explains how investor education has become an increasingly important part of the firm’s work. Following Hurricane Ian and changes in interest rates and reinsurance pricing, private equity firms, private credit funds, sovereign wealth funds, pension funds and family offices began looking more closely at property catastrophe risk and insurance-linked securities.
What began with investor roundtables focused on a specific market opportunity has developed into broader discussions covering casualty and specialty insurance, reinsurance sidecars, MGAs, Lloyd’s and direct investment in insurance businesses.
Nick, Michael and Cate discuss why institutional capital continues to move into insurance. Michael explains why insurance services businesses and MGAs remain attractive to private equity investors, including their recurring revenue, strong free cash flow and comparatively capital-light operating models.
For investors seeking direct access to underwriting risk, insurance can also provide diversification from wider financial markets. Improvements in modelling, data and market information have helped investors better understand property and casualty risks and evaluate how those investments may fit within a broader portfolio.
The conversation explains how sidecars allow institutional investors to provide capital against a defined portfolio of insurance or reinsurance business. These structures can enable investors to participate in underwriting returns while helping insurers and reinsurers diversify their sources of capital and develop longer-term institutional relationships.
Cate discusses how the team develops a detailed understanding of the appetite of approximately 700 investors. This includes the risks they will consider, their investment horizons, the source of their capital and where they are within the life of their funds. That information allows the team to connect insurance businesses with relevant investors and consider how an opportunity could be structured.
Michael also shares examples of Howden Capital Markets & Advisory’s work across carrier M&A, MGA transactions, company formations, capital raising and insurance-linked securities. He explains why specialist insurance knowledge remains valuable even when advising highly experienced institutional investors with established financial services teams.
The discussion then turns to investor appetite for MGAs. Michael explains that demand for high-quality MGA platforms remains strong, with significantly more private equity investors seeking platform investments than suitable businesses available.
However, investors are becoming more selective as market conditions change. Businesses that benefited primarily from favourable pricing will need to demonstrate that their performance can continue through different stages of the insurance cycle.
Michael outlines the factors investors are prioritising when assessing an insurance business. A consistent underwriting track record remains fundamental, alongside durable growth, strong capacity relationships, an integrated operating platform and a management team capable of performing across different market conditions.
Technology and data are also becoming more important. Investors want to understand whether a business is using them to improve efficiency, price risk more effectively, strengthen the customer experience and build a more scalable organisation.
Cate explains how institutional investors are moving away from trying to enter and exit insurance investments around short-term market changes. Instead, more are seeking long-term partnerships and holdings that can perform throughout the cycle, whether through an MGA, an insurance-linked securities fund, a sidecar or another form of direct investment.
Looking ahead, Michael expects continued activity across MGA M&A, insurance services and specialty insurance. He discusses why differentiated underwriting, experienced management teams, integrated platforms and effective use of data will continue to influence which businesses attract capital and achieve premium valuations.
Cate also highlights growing investor interest in long-term property and casualty partnerships, sidecars and Lloyd’s. Investors that initially entered the market through managed funds are increasingly exploring more direct participation and considering structures such as corporate members and London Bridge vehicles.
Cate closes with advice for investors who may be interested in insurance but concerned about its complexity. She encourages them to continue asking questions, learning about the risks and developing their understanding rather than dismissing the sector because it is unfamiliar.
Michael advises insurance businesses to consider the full range of capital available to them. Depending on the company and its objectives, the appropriate solution could involve institutional equity, private equity, debt, insurance-linked securities or reinsurance capital.
Connect with Michael Forman on LinkedIn to follow his work across insurance M&A, capital raising and strategic advisory.
Connect with Cate Kenworthy on LinkedIn to follow her work across institutional investment, insurance-linked securities and investor education.
Learn more about Howden Capital Markets & Advisory.
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