By David Bull

March 12 - (The Insurer) - BV Investment Partners-backed Balance Partners has closed its first M&A deal with the acquisition of MGA and programs platform Vanguard Specialty in a move that will significantly scale up its professional liability offerings and add a meaningful amount of GWP to Balance Partners’ already considerable premium volume.

Tampa, Florida-based Vanguard Specialty has a total of 11 programs on its books, with the majority of its business coming from lawyers professional liability (LPL), real estate, E&O, title agents, along with insurance agents and brokers E&O.

Terms of the transaction have not been disclosed, with the acquisition closing Friday, March 7, while a figure for Vanguard Specialty’s annual GWP had not been confirmed, but was described as meaningful by sources close to the situation.

MarshBerry acted as financial adviser to Vanguard Specialty in its sale process.

MGA and programs platform Vanguard Specialty was founded by Stephen van Wert in 2016 with the company’s other principals including Randy Mrozowicz, who joined in 2020 with the launch of its non-standard LPL program.

Vanguard Specialty was privately held and owned by its principals prior to the transaction.

It has strong relationships with a mixture of unnamed A-plus-plus and A-plus XV AM Best-rated carriers, which provide capacity for the majority of its book of business.

The company's management team will remain intact following the acquisition and the Vanguard Specialty brand will be retained on the Balance Partners platform.

SELECT M&A

Talking to Program Manager, Balance Partners co-founder Joe Calise said the acquisition is an example of the select approach to M&A at the company, which secured backing from BV Investment Partners last April.

The strategic investment was aimed at supporting the company’s continued organic growth, as well as allowing it to consider inorganic opportunities including team lifts and potential M&A.

Calise, who co-founded Balance Partners with Michael Sillat in February 2019, said that the company has been looking to find M&A opportunities that are a good fit around underwriting philosophy and culture.

“This was the first one that really threaded the needle for us on a myriad of things. The owner operators have a similar mindset to Michael and me, they have a track record with great carriers that they represent, and they built everything organically,” he commented.

Sillat added that in a challenging M&A environment, Vanguard Specialty is also a “great fit” because of its complementary portfolio of business.

“If you look at the products we underwrite, we do have some professional liability, but it’s very niche in comparison to theirs.

“We believe that our success lies in diversification of product, and this was a perfect fit because it automatically gets us into the professional liability space at a multiple of what we are today,” he commented.

'RIGHT FIT'

Van Wert said: “We talked with many potential partners over the past year, and from the first time we spoke with Balance Partners, it always felt like they were the right fit for us. Randy and I are honored to be Balance Partners’ first acquisition, and to come under Michael and Joe’s leadership to take Vanguard Specialty to the next level.”

Mrozowicz echoed comments about the complementary nature of the two businesses.

“We are excited about the new partnership, joining Balance Partners seemed like a perfect fit and will allow us to capitalise on our complementary strengths and accelerate growth of our current and future professional liability programs,” he added.

Calise and Sillat said that Balance Partners would enable Vanguard Specialty to scale its business, and benefit from the platform’s operational and administrative resources, including technology.

The acquired company will also benefit from Balance Partners’ marketing capabilities and its ability to facilitate introductions in areas such as distribution along with insurance and reinsurance capacity to help expand Vanguard Specialty’s footprint where opportunity exists beyond their current relationships.

Sillat highlighted the opportunity to provide Vanguard Specialty access to the Lloyd’s and London marketplace, where Balance Partners has strong relationships with capacity providers that support its portfolio of programs.

“We’re looking forward to introducing them into the London marketplace and see what kind of programs we can launch together not only with other domestic U.S. markets, but also Lloyd’s of London as that is greenfield for them,” said the executive.

As previously reported, Balance Partners has grown since its launch to roughly $300 million-$350 million of premium volume across 15 programs, with 10 operated as in-house programs and another five on its incubator platform, Springboard.

The company looks to match underwriting talent with “state-of-the-art” infrastructure, distribution relationships and insurance carrier capacity, as well as reinsurance support.

Balance Partners said the approach has led to “substantial” underwriting profits for its diverse portfolio of over 50+ global insurance and reinsurance partners.

Last year’s recap transaction to support inorganic growth initiatives was part of the second phase of development for Balance Partners after its initial focus on building out its platform and portfolio of programs to drive organic growth.