Private equity firms EQT AB, PAI Partners and Stone Point ha
ve been shortlisted in the bidding for German insurance brokerage Global Group, people familiar with the matter said.
Global Group, which is backed by buyout firm Castik Capital, could fetch a valuation of about €2 billion ($2.3 billion) in a sale, one of the people said. Deliberations a
re ongoing and the companies could still decide against a deal, the people said, asking not to be identified as the information is private.
Representatives for Castik, EQT and PAI declined to comment, while a representative for Stone Point didn’t respond to requests for comment.
Global Group operates in Germany, Austria, Switzerland, and the Netherlands, according to its website. Castik in 2
023 acquired a stake in Global Group, which has been acquiring a slew of smaller insurance brokerage firms in recent years.
Photograph: Germany’s stock market index DAX; photo credit: Alex Kraus/Bloomber
Third-party investors “are not exposed to the insurers’ underwriting and investment performance but
rather derive steady fee income from operating the attorney-in-fact” of a reciprocal exchange, observes Rick Cheney, s
enior analyst at ALIRT and author of the late-October report, “Overview of Reciprocal Insurance Exchanges and Recent Market Trends.”
ALIRT’s new report explains that RIEs are unincorporated i
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nsurance entities owned by policyholders, or “subscribers.” Distin
ct from stock or mutual insurers, RIE policyholders share directly in profits and losses and appoint an “attorney-in-fact” (AIF) to manage operations.
Read more about RIE structures: Unique Structure of Reciprocal Insurance Exchanges Offers Release Valve on Pre
ssurized Markets and A Look at Reciprocal Insurers From 30,000 Feet
AIFs can be owned by managing general agents and underwriters, public or private organizations, individuals, the rec
iprocal itself or other insurance companies, Cheney’s report explains.
This model allows capital flexibility but can also create risk misalignment between policyholders and investors.
Since an RIE is owned by the policyholders, “this ‘walls off'” the investors who own the attorney-in-fact, Cheney wrote i
n the report, also noting that third-party investors are increasingly also d
eriving fee income from the RIE’s distribution source—usually an MGA or MGU.