Car insurance can be very boring — but don’t tell that to private equity firms, which dominate the insurance software sector.
KKR on Friday is expected to announce it has completed a $1.1 billion acquisition of Mitchell International from fellow private equity firm Aurora Capital Group.
KKR will be putting $400 million down in the deal, a source close to the financing said.
Aurora bought Mitchell in 2007 from the private equity firm Hellman & Friedman — making KKR its third private equity owner.
Mitchell makes software for automobile insurance claims processing, and its major customers are firms like Geico, Farmers and Nationwide.
All three of the dominant automobile-claims software companies have PE ties.
GTCR Golder Rauner in 2006 teamed with former Mitchell President Tony Aquila to buy a division of Automatic Data Processing for $975 million.
That company, renamed Solera, is now listed.
Leonard Green & Partners this year bought the third industry leader — CCC Information Services — from fellow PE firm Investcorp for $550 million.
PE firms love the space because the leaders all have dominant market positions, making it hard for competitors to emerge. That makes it relatively easy for them to borrow money against these companies and retire the debt without worrying about unpredictable earnings.
KKR worked with investment bank Three Ocean Partners in the Goldman-run auction.
KKR declined comment and Aurora did not return calls.