Genstar Continues Building Hispanic Insurance Platform

With the acquisition late last month of West Coast Auto Insurance Services, Genstar Capital LLC closed its second add-on deal for Confie Seguros, a platform launched in January to buy insurance brokerages that serve the Hispanic consumer.

West Coast Auto is an insurance brokerage with 45 retail locations throughout Northern and Southern California. Concurrent with the platform’s founding, Confie Seguros’s first acquisition was Westline Corp., an insurance brokerage with locations throughout Southern California. Later this month Confie Seguros expects to enter the Texas marketplace through a third add-on, said Mordy Rothberg, president of Confie Seguros.

The acquisition of West Coast Auto more than doubles Confie Seguros’s brick-and-mortar presence to a total of 80 retail brokerage stores throughout California, and gives the platform revenue of $75 million. San Francisco-based Genstar Capital’s goal is for Confie Seguros to generate annual revenue of $300 million within the next three to five years, half of which coming from auto insurance, and the remainder coming from products like homeowner’s and life insurance.

Add-on and growth initiatives for the company are geographically focused on eight to 10 of the most densely populated Hispanic states, including Arizona, California, Florida, Illinois, Nevada and Texas. Genstar Capital and Confie Seguros management have committed $75 million for future add-ons, in addition to a $200 million bank facility provided by GE, Jeffries and Madison Capital.

Confie Seguros uses a combination of Spanish-language television advertisements and its high concentration of brick-and-mortar locations in densely populated Hispanic geographies to attract clientele. “Hispanics are the fastest-growing segment of the population and really the most underserved when it comes to financial products,” Rothberg said.

If Genstar Capital reaches its intended revenue goal for Confie Seguros, the company would cut a towering figure in the fragmented landscape of Hispanic-targeted insurance brokerages in the United States, which consists largely of firms that generate between $3 million and $15 million in annual revenues, Rothberg said.

Confie Seguros’s CEO is John Addeo, an insurance veteran with a track record of managing successful insurance consolidation plays and exits. Previously, Addeo served as CEO of Alliant Resources Group, a property and casualty insurance company that’s been passed over the years through the hands of GTCR Golder Rauner, Lindsay Goldberg & Bessemer and The Blackstone Group. Prior to that, Addeo served as president and COO of USI Insurance Services, a publicly-traded property and casualty insurance firm that was sold to GS Capital Partners, the private equity arm of Goldman Sachs, for $1.4 billion last year.

Confie Seguros is a portfolio company in Genstar Capital Partners V LP, a $1.55 billion investment vehicle that closed in 2007.