White Mountains Insurance Group, Ltd. is planning to buy out the majority of Bamboo Ide8 Insurance Services, LLC Bamboo, a managing general agent (MGA) specializing in the California homeowners insurance market.
The insurance company plans to invest $285 million in this strategic move, which will include main capital to support Bamboo’s expansion. As part of the agreement, White Mountains will acquire approximately 70% of the outstanding basic shares of Bamboo. Bamboo, founded in 2018 by John Chu, has quickly acquired traction in the competitive California insurance industry, with over 100,000 policyholders.
It uses a technology-driven underwriting platform to efficiently assess and manage risks. White Mountains intends to use this acquisition to help Bamboo expand outside California, grabbing fresh opportunities in other states. Notably, the present management team of John Chu and Bamboo will continue to operate the company and retain a major equity share.
The deal is expected to close in the first quarter of 2024, subject to regulatory clearances and standard closing conditions. White Mountains’ ownership portion and corresponding investment will be determined by Bamboo unitholder elections held before to closure.
Bamboo Ide8 Insurance Services, LLC is a technology-focused insurance distribution platform that serves the California residential property market. Bamboo, which primarily operates as a full-service MGA, handles all parts of the placement process on behalf of its fronting and (re)insurance partners.
This involves product development, marketing, underwriting, policy issuance, and claims management, with commissions based on the volume and profitability of the insurance placed. Bamboo’s emphasis on underwriting excellence makes effective use of technology and data science techniques to assess, price, and manage risks.
Bamboo also has two integrated businesses: a retail agency that sells supplemental products on behalf of third parties and a captive reinsurer that shares the underwriting risk of Bamboo’s MGA programs.
White Mountains is a Bermuda-based financial services holding company. It is traded under the symbol WTM on the New York Stock Exchange and WTM.BH on the Bermuda Stock Exchange.
“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,” said 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,” said John Chu, Founder and CEO of Bamboo.