White Mountains to acquire a majority stake in Bamboo

White Mountains has entered into an agreement to acquire a majority stake in Bamboo Insurance, an MGA focused on the California homeowners insurance market. White Mountains expects to invest approximately $285 million, including primary capital to support Bamboo’s growth, and to acquire approximately 70% of Bamboo basic shares outstanding.

Bamboo was launched in 2018 and it raised over $20 million. The company claims to have over 100,000 California policyholders.

The current Bamboo management team will continue to lead the business through its next phase and will retain a significant equity stake.

“We are pleased to make this investment alongside John and the Bamboo management team. Bamboo is delivering a much-needed insurance alternative to homeowners in California. Bamboo has strong momentum, and we look forward to supporting its continued growth.” – Chris Delehanty, head of M&A of White Mountains.

“This transaction marks a new and exciting chapter for Bamboo. We are fortunate to have found a like-minded capital partner who shares our vision and has a strong track record of successful insurance partnerships.” – John Chu, founder and CEO of Bamboo.

The transaction is expected to close in the first quarter of 2024. The closing is subject to regulatory approvals and other customary closing conditions. The closing is not subject to a financing condition. The exact ownership to be acquired by White Mountains, and the resulting amount that will be invested, will be determined based on Bamboo unitholder elections made prior to closing.

Bottom Line: White Mountains has earned a reputation as a shrewd asset seller through transactions such as Sirius (2016), OneBeacon (2017), and NSM Insurance (2022). Now, they plan to invest $285 million in a property MGA. Sutton National reported $67 million in DPW for this MGA last year, specifically in the home line of business. One standout contender is Openly that generated $167 million in premiums last year. Just last month, Openly secured a $100 million funding round, bringing its total funding to $238 million. It’s shaping up to be a close competition.