Private equity firm Onex Corp. has struck a $1.3-billion (U.S.) deal to acquire York Risk Services Group Inc., a U.S.-based provider of risk management and managed care services.
The agreement to purchase York Risk boosts Onex’ presence in the U.S. insurance industry.
York Risk’s niches are property, casualty and workers’ compensation, offered to self-insured companies, public entities, insurance carriers, insurance pools, alternative risk groups and insurance intermediaries.
U.S. private equity firm ABRY Partners LLC said in a separate announcement it is selling its majority equity interest in York Risk to Onex.
Published reports prior to the announcement said York Risk was exploring a sale that could value the business at more than $1.5-billion.
The deal is set to close in the third quarter.
Persippany, N.J.-based York Risk says on its website that it has helped handle claims related to all the major hurricanes that have hit the U.S. in the past 40 years, as well as several claims related to the Sept. 11, 2001, terrorist attack on the World Trade Center.
The company has 3,800 employees and more than 6,300 clients.
In another insurance-related acquisition in 2012, Onex acquired Valhalla, N.Y.-based insurance broker USI Insurance Services for $2.3-billion.
The USI subsidiary has made more than a dozen acquisitions, including a deal earlier this year to buy 42 of Wells Fargo Insurance’s brokerage and consulting locations across the United States.
The insurance business is proving attractive to private equity firms in part because of its ability to generate a reliable cash flow. Among other deals are Hellman & Friedman’s purchase of Hub International Inc. last August and KKR & Co.’s acquisition of Alliant Insurance Services Inc. prior to that.
At the same time, Onex is selling assets in a market of rising prices.
Earlier this year it inked agreements to sell Warranty Group, a provider of extended warranty contracts on consumer goods, for $1.5-billion, and industrial conglomerate Gates Corp. for $5.4-billion.
“We believe that Onex will have significant dry powder [for more acquisitions] available following the pending sales of the Warranty Group, Gates Corp., and secondary offerings,” Canaccord Genuity Group Inc. analyst Scott Chan said in a research note Wednesday.
Onex’ cash balance should stand at about $2.4-billion once the York Risk transaction is completed, he said.
Other companies Toronto-based Onex has stakes in include electronics manufacturer Celestica Inc. and customer care provider Sitel Worldwide.
As of March, 2014, Onex’s businesses had $45-billion of assets, produced annual revenues of about $35-billion and employed about 231,000 people around the world.