After Lee Equity sold K2 Insurance Services in December 2022, the private equity firm set out in earnest for another insurance agent with underwriting expertise to target for investment, said Mark Mauceri, a partner with the private equity firm.

Demand for insurance services appears to be part of a long-term trend bifurcating the insurance business, Mauceri said. On one side are insurance carriers that collect premium and build the capital to cover and pay out losses. On the other are insurance services companies like managing general agents (MGAs) that tailor, sell and administer coverage for carrier-paid commissions, he explained.

Lee Equity’s search for its next MGA asset culminated in a deal for a majority stake in Bermuda-based Arcadian Risk Capital that closed 30 January. The PE firm purchased a 49% stake from insurance carrier SiriusPoint for USD 139m plus additional equity from Arcadian management for undisclosed terms, Mauceri said.

MGAs, which use capital from insurance carriers to develop and market their own coverage policies, have grown in size and importance within the insurance world, and have become central to Lee Equity’s investment core in the last decade, said Mauceri.

The MGA market accounts for USD 100bn-USD 110bn of annual insurance premium in the US, which is about 10% of the property and casualty insurance market, Mauceri said. The size of the market has doubled in the last five years and remains on a high-growth trajectory, he said.

“We believe MGAs will continue to take share and grow faster than the broader property and casualty insurance industry,” the executive said.

MGAs have developed a sophisticated, technology-based distribution infrastructure, attracted more capital from carriers for their businesses, and have been drawing some of the best underwriting talent away from carriers, Mauceri said.

Positive early negotiations

Lee Equity identified Arcadian as a potential investment about a year after selling K2. In 1Q24, Mauceri and another partner travelled to Bermuda to meet Arcadian founder John Boylan and COO Paul Connor.

“At the time they weren’t yet thinking about or working on a transaction, but it was immediately clear that there was a strong cultural fit,” Mauceri said.

The two sides built a relationship throughout the year. Around the end of 2024, SiriusPoint had engaged Oppenheimer for a sale process for Arcadian — about the same time frame that Lee Equity hired Insurance Advisory Partners, Mauceri said.

The auction process that started around New Year’s 2025 was “limited,” he said. Talks became exclusive between Lee Equity and Arcadian in 2Q25, with negotiations going in-depth over designing a new management and employee incentive program, Mauceri said.

“Alignment with management and employees is critical,” he said. “We spent a lot of time balancing incentives between underwriting profitability and the company’s equity performance.”

Arcadian’s talent and sophisticated operations presented an exceptional fit for the nascent MGA sector and for the industry’s tailwinds for growth, Mauceri said.

“Our diligence checks were off the charts in terms of the reputations of some of the company’s underwriters in the market,” he said.

Founded in 2020, Arcadian had assembled an impressive roster of capital providers in previous backer SiriusPoint as well as RenaissanceRe, and Arch, Mauceri noted. SiriusPoint agreed as part of the deal to extend capacity for Arcadian through 2031.

Organic and M&A expansion

Organic plans will lead Arcadian’s expansion strategy, beginning with additions of first-rate underwriting talent to add new policies for new lines and geographies, Mauceri said.

Arcadian’s presence in the US is “relatively nascent” and presents growth opportunities here and in London.

Lee Equity will also back the continued build-out of the insurer’s technology, especially for data, analytics, and automation, Mauceri said.

Arcadian plans to expand its geographic footprint and product offerings through both organic growth and M&A, with particular interest in marine, cyber, aviation, US accident and health, and surety, Mauceri said.

The company is unlikely to pursue a transformative merger unless there is a compelling strategic and cultural fit, he said. SiriusPoint reported that Arcadian had USD 17.6m in trailing 12-month EBITDA at the time it announced the deal with Lee Equity.

Lee Equity has substantial flexibility to scale the platform through bolt-on acquisitions, he said.

The PE firm has fielded “quite a lot” of inbound inquiries from teams interested in learning about the platform to consider joining, Mauceri said.

Insurance services thesis

Lee Equity invested out of Fund IV, which closed 1 July 2024 with USD 1.3bn in commitments. The fund, which is about 60% committed, is focused on a small set of financial and healthcare services subsectors with insurance services as a core area of emphasis, Mauceri said.

The fund invests USD 75m-USD 150m of equity with a focus on the middle market with the option to invest more for the right fit for its investment thesis, he said.

Lee Equity sold life insurance and annuities distribution platform Simplicity Group to SkyKnight and Dragoneer in December 2024. The PE firm in October 2025 closed a USD 1.6bn recapitalization of McLarens Global, which provides complex commercial insurance claims services.

On 3 March, Lee Equity announced an investment in KCIC, a corporate consultant for managing high value tort liabilities, related insurance assets and litigation challenges.