Bain Capital has raised $1.15 billion for its first fund dedicated to investing in the insurance industry, as the private equity firm aims to create and invest in companies in the sector, a senior executive told Reuters.
The fund exceeded its initial $750 million target through backing from high-net-worth individuals, institutional investors and family offices. It will be deployed through Bain Capital Insurance, a dedicated investment arm the firm launched in 2021.
The new fund underscores the increasing role that private equity is looking to play in the insurance sector, as providers seek to cut costs by shedding assets, which buyout firms can manage more efficiently and grow through add-on acquisitions.
Matt Popoli, global head of Bain Capital Insurance, told Reuters that the new capital pool, Bain Capital Insurance Fund, would give his 20-strong team the ammunition to back middle-market insurance firms overlooked by others.
“Our approach to insurance is to avoid the crowd, and we have a big enough team with the expertise to drill down where the herd has not gathered and find opportunities where we can really grow and add value.”
Focused on North America and Europe, the fund will be used to launch new insurance platforms, as well as help carve businesses out of existing companies to develop on a standalone basis.
Popoli said the fund will also invest in niche insurance brokers, which can be acquired for cheaper valuations than large rivals.
He also sees opportunities in markets where insurers can charge more to offer policies as rivals pull out – so-called hard markets. For example, rates to reinsure U.S. property catastrophe risk jumped 50% this year as climate change takes its toll.
Bain has already begun deploying the fund. Last month it launched a new company Aptia, following Bain’s acquisition of the U.S. employee benefits administration and U.K. pension administration businesses of Mercer, a unit of Marsh & McLennan Companies.