A.M. Best interviewed Gardere Partner Kim Yelkin, chair of Gardere's Insurance Regulatory Practice, for an article discussing what makes insurance brokers an interesting target for private equity firms. An excerpt can be viewed below.
Middle Market Aglow
The recently announced acquisitions of two of the world's largest brokers by two private equity firms highlight how attractive the broker industry is for investors, experts said.
Private equity "understands it's a complicated industry and a highly regulated industry, but brokers do not have to play by the same rules as insurers," said Kimberly A. Yelkin, an attorney with Gardere Wynne Sewell. "Hedge funds and private equity funds think if we can get in there, even if we don't know anything about insurance, if we keep the management we can prosper with high rates of return. I think you'll see private equity as investors in the insurance industry as a whole continue to grow."