Middle market private equity firm Genstar Capital Management has teamed up with David M. Armstong to launch Palomar Insurance Holdings. Genstar and Palomar management have invested $75 million in Palomar. Armstrong will serve as CEO of Palomar. Palomar will provide commercial and residential earthquake insurance.
SAN FRANCISCO, March 12, 2014 – Genstar Capital Management, LLC, a middle market private equity firm that focuses on investments in selected segments of the financial services, software, healthcare, and industrial technology industries, today announced that it has partnered with insurance industry veteran David M. “Mac” Armstrong to establish a new platform company, Palomar Insurance Holdings, that will initially serve as a pure-play provider of commercial and residential earthquake insurance. The Company was funded with $75 million of equity capital from Genstar and the management team.
Concurrent with the investment, Palomar Insurance Holdings acquired an admitted insurance company from a national insurer that is licensed to underwrite business in seven states and subsequently changed the name to Palomar Specialty Insurance Company (“Palomar”). Palomar has received a Financial Strength Rating of A- (Excellent) and an Issuer Credit Rating of “a-” from A.M. Best Company. A.M. Best assigned a stable outlook to both ratings.
Palomar initially will focus on the residential and commercial earthquake markets in earthquake-exposed states such as California, Oregon, Washington and Missouri where consumers tend to have limited options to purchase earthquake insurance.
Genstar is partnering with Mac Armstrong, former President of Arrowhead General Insurance Agency, Inc., the largest program administrator in the property and casualty insurance sector with over $800 million in written premium. Mr. Armstrong will lead Palomar as Chief Executive Officer.
Genstar and Palomar have assembled a team of seasoned insurance professionals with considerable earthquake insurance experience. Mr. Armstrong, President Heath Fisher, Chief Underwriting Officer Andrew Robinson and Chief Operating Officer Jon Christianson have over 50 years of experience in the earthquake insurance market and have deep relationships with the distribution sources and reinsurers required to effectively service the market. Palomar will distribute its product through a network of program administrators as well as selected retail producers and wholesale brokers.
“Genstar’s investment in Palomar follows a proven growth strategy in the insurance industry and one that we at Genstar have utilized to create strong and growing companies operating in niche sectors of this market,” said J. Ryan Clark, Managing Director at Genstar. “Palomar is well capitalized and we look forward to working with Mac and his extremely talented management team to pursue the growth and development initiatives we have identified in the approximately $4 billion earthquake insurance market.”
Mr. Armstrong, said, “Genstar has been very successful in identifying attractive insurance investment opportunities and partnering with leading industry executives to create market leaders in the brokerage, technology and information, and specialty insurance categories. We look forward to our new partnership with Genstar whose team of experienced investment professionals and industry advisors will help us quickly and profitably grow Palomar.”
Palomar’s Board of Directors includes Mr. Armstrong, two members of Genstar Capital, Mr. Clark and Geoff Miller, as well as independent director Tom Hutton, the former Chief Executive Officer of Risk Management Solutions and White Mountains Re. The Company will also be advised by Dennis Chookaszian, the former CEO of CNA Insurance; Bob Dowdell, the former CEO of Marshall & Swift; and Richard Taketa, President of York Risk Services Group.
Genstar’s other investments in the insurance industry include Acrisure, a leading Midwest retail insurance brokerage; Insurity, a leading provider of policy administration software solutions for the property and casualty insurance industry; Granite Global Solutions, a leading Canadian provider of risk mitigation services to insurance and corporate clients; and Innovative Aftermarket Systems, a premier marketer, administrator and underwriter of vehicle protection products and related services sold through automobile dealers. In 2012 Genstar sold Confie Seguros, a leading national insurance distribution company primarily focused on the insurance needs of the Hispanic consumer, after growing the company from a single platform of 30 stores at its inception to more than 300 retail locations today and more than $200 million in revenue.
About Genstar Capital Management, LLC
Genstar Capital (www.gencap.com) is a leading private equity firm that has been actively investing in high quality companies for 25 years. Based in San Francisco, Genstar works in partnership with its management teams and its network of operating executives and strategic advisors to transform its portfolio companies into industry-leading businesses. Genstar has more than $3 billion of committed capital under management and targets investments focused on selected sectors within the financial services, software, healthcare, and industrial technology industries.