b'TABLE OF CONTENTSmore than $265 million from third-party institutionalAppalachian Underwriters (Appalachian). Among investors. This launch, the first of its kind in thethe largest independent MGAs, Appalachian will market, was designed to bring enhanced deal- provide Acrisure with a broadened dataset and making firepower and institutional investor capacitydistribution network through its strength in the to bear on the legacy and runoff reinsurance sector. Workers Compensation, Commercial Specialty, Later in the year, Randall & Quilter InvestmentPersonal Lines and Transactional Wholesale spaces. Holdings Ltd. (R&Q) realized its long-standing ambition to create a dedicated reinsurance sidecarM&A Outlook in US/Bermuda for 2022with the formation of Gibson Re Ltd., with an initial Although 2021 saw a relatively low level of M&A capitalization of approximately $300 million fromactivity in the P&C sector, as the uncertainty investors. This new vehicle, which will reinsure 80%surrounding the COVID-19 pandemic subsides, the of R&Qs new qualifying legacy transactions for theemergence of novel products and a hunger for next three years and allow R&Q to supportdiversification should fuel an expected bounce back approximately $2 billion of reserves, serves toin 2022. Consolidation among agents and brokers is increase R&Qs flexibility in the market by helping tolikely to continue and the presence, and continued advance the transition of legacy insurance from aintroduction, of PE-backed and other financial balance sheet intensive episodic earnings modelbuyers with large quantities of dry powder ready to into a recurring fee-based business. deploy should further help spur M&A activity in the P&C sector going forward.Structural Growth in MGA/MGU SectorThere has been substantial growth in the managingUK and Europegeneral agent and managing general underwriter (MGA/MGU) space over the last decade, withThe blockbuster deal of 2020Aons all share offer delegated authority premium increasing from $17to acquire its fellow London-listed rival, Willis billion to $54 billion over the last year, a rate of 12%Towers in a US$30 billion tie upbecame the growth per year. Approximately 10% of the P&Cblockbuster deal of 2021 that did not close as US market is now handled by MGA/MGUs. The need forand EU regulatory conditions could not be satisfied. specialization is increasing in the insurance industry,Many market commentators had at the time of the but the costs of that specialization remain high,announcement raised concerns about the execution making outsourcing in highly specialized areas torisk of such a complex deal and market dominant MGA and MGUs an attractive proposition.outcome in terms of the combined group, and so it Capping a big 2021 for MGA deal-making, fintechcame to pass that the acquisition was terminated. firm and global insurance broker Acrisure, LLCThe fallout from such a transformational deal not (Acrisure) announced acquisitions of the MGAclosing can be significant, particularly given and third-party administrator operations of SUNZchanges to key personnel and departures in the Insurance, as well as an acquisition of national MGAperiod from the deal first being announced. MAYER BROWN |19'