S&P expects Carlyle to have 49% Trucordia stake after strategic investment

By Michael Loney

June 10 - (The Insurer) - S&P Global Ratings expects Carlyle to have 49% ownership of Trucordia following an equity recapitalization, with the rating agency also believing M&A will remain a big driver of the insurance broker’s growth but at a more moderate pace.

Trucordia is refinancing its capital structure with a proposed $1.9 billion first-lien term loan due 2032 and $548 million second-lien term loan due 2033. At the same time, it plans to issue about $1.3 billion of new common equity to existing financial sponsor Carlyle.

Trucordia announced last week that it will receive a $1.3 billion strategic investment from Carlyle's Global Credit platform.

The transaction, which is expected to close this month, values Trucordia at $5.7 billion.

“Following this equity recapitalization, we expect Carlyle to have roughly 49% ownership of the company, with the remaining held by Trucordia partners, management, and employees,” S&P said in a ratings release.

Trucordia, which was formerly known as PCF until 2023, is seeking to issue new debt in the syndicated market to refinance existing debt, fund cash on the balance sheet and other general corporate purposes, and pay related fees and expenses.

S&P assigned B long-term issuer credit rating to Trucordia, as well as a B issue rating and '3' recovery rating to its proposed $1.9 billion first-lien term loan due 2032.

“Our rating reflects Trucordia’s narrow focus within the highly fragmented and competitive U.S. insurance brokerage industry, balanced by its track record of healthy growth and relatively modest but expanding scale,” S&P said.

The rating agency said that Trucordia generated total reported revenue of about $865 million for the 12 months ended March 31, 2025, placing it among the top 20 largest U.S. insurance brokers.

“While this represents a fairly solid market position and scale, Trucordia is on the smaller end in our rated peer set,” S&P said.

Trucordia’s property casualty business represents about 70% of total revenue. Its employee benefits represents just under 20% of revenue.

S&P highlighted that Trucordia “has some minor pockets of geographic and industry concentration, with its top four states and industries each accounting for slightly over half of total revenue."

The rating agency expects M&A activity to remain a key growth driver for the company, “albeit at a more moderated pace relative to peak volumes a few years ago.”

“Trucordia has more than doubled in size since 2021, largely driven by an aggressive M&A strategy that was further supported by healthy average organic growth of about 9%. When its primary focus was on achieving scale in 2021 and 2022, Trucordia completed more than 80 tuck-in deals per year, which collectively represented over $450 million of acquired revenue,” S&P said.

The company has since meaningfully reduced its M&A activity from this scaling phase.

In 2024, Trucordia closed 22 deals representing about $70 million in acquired revenue.

“Even with this shift in focus, we expect M&A to remain a key contributor to total revenue growth,” S&P said. “In our base case, we see deal volumes remaining at similar levels as seen in 2024, as the company prioritizes value creation rather than achieving scale.”

Trucordia has consistently generated organic growth in the mid- to high-single digits on strong new business and client retention trends.

“We think the company also benefited from having a solid mix of industry exposures and presence in higher growth specialty areas, such as its relatively modest but growing managing general agent (MGA) businesses,” S&P said.

For the 12 months ended March 31, 2025, Trucordia’s S&P-adjusted Ebitda margin was around 34%. This compares favorably among rated peers but is a contraction from nearly 39% for the same period last year.