Exclusive: Carlyle to acquire NSM Insurance from White Mountains in $1.78 billion deal

(Refiles to clarify BenefitMall was formerly known as a payroll services provider, in the seventh paragraph)

By Chibuike Oguh

(Reuters) - Private equity firm Carlyle Group Inc told Reuters on Monday it has agreed to acquire U.S. specialty insurance provider NSM Insurance Group from White Mountains Insurance Group Ltd for $1.78 billion in cash.

Carlyle said the deal is expected to close in the second half of this year. The transaction is expected to add $280 per share to White Mountains' adjusted book value.

Pennsylvania-based NSM Insurance is one of the largest independent insurance brokerages that underwrites policies for pets, non-profit organizations, workers' compensation, trucks and behavioral healthcare. It generates more than $1 billion in premiums from more than one million clients, according to its website.

"We will look to invest back into the platform a bit more heavily and ramp up M&A activity," James Burr, a Carlyle managing director, said in an interview. "There's a lot of white space in business-to-customer and improving technology."

Private equity firms have been driving consolidation in the insurance brokerage sector. Mergers and acquisitions in the insurance sector more than doubled in volume to a total of $58 billion in 2021 from $22 billion a year earlier, according to consulting firm Deloitte.

In 2021, Carlyle sold its majority stake in London-based insurance brokerage PIB Group to private equity firm Apax Group for an undisclosed amount.

Carlyle has invested more than $10 billion in the financial services space, including former payroll services provider BenefitMall, U.S. insurance claims firm Sedgwick Claims Management Services and China's Ant Group.

In the NSM Insurance deal, Carlyle and Bermuda-based White Mountains were advised by Morgan Stanley, J.P. Morgan, Wachtell, Lipton, Rosen & Katz, and Cravath, Swaine & Moore LLP.

(Reporting by Chibuike Oguh in New York; Editing by Greg Roumeliotis and Will Dunham)