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Dhiren Jhaveri is in charge of one of the life insurance and annuity industry’s active dealmakers.
His Chicago-based company, Kuvare US Holdings Inc., is using capital from three investors to buy companies that sell life insurance, annuities and supplemental health insurance products.
The company emerged on the scene in March 2016, by announcing that the organizers see this as a good time to create a stable, well-capitalized insurance platform aimed at middle-market consumers.
Since then, Kuvare has used acquisitions and a reinsurance agreement to create a business with about $3.7 billion in assets
Jhaveri, Kuvare’s chief executive officer, talked about the company’s strategy Thursday, in an interview. Here are five highlights, drawn from the interview and other sources.
1. Dhiren Jhaveri
Jhaveri has roots in the fields of investment banking and insurance company strategy.
He has a bachelor’s degree from the State University of New York at Binghamton and a master’s degree in business from the University of Chicago.
Early on, he created securities backed by pools of consumer loans and other assets for Barclays. He moved on to become a consultant at McKinsey.
Jhaveri then joined Sammons Financial Group — the parent of Midland National and North American Company for Life and Health — as a vice president. He spent six years helping Sammons work with investors and analyze and make deals. While at Sammons, he was active on committees at the American Council of Life Insurers.
Kuvare acquired Guaranty Income Life Insurace Company, an annuity and life issuer based in Baton Rouge, Louisiana, in October 2016.
The company completed the acquisition of another company, Cedar Rapids, Iowa-based United Life Insurance Company, earlier this month.
Kuvare has also agreed to assume responsibility for a block of fixed annuities with about $850 million in reserves, through a Bermuda-based reinsurance subsidiary, Kuvare Life Re Ltd.
3. Time Horizon
New holding companies are famous for coming on the insurance scene with cash from investors, growing rapidly through acquisitions, then selling out, either to other private investment groups, or to public investors, through an initial public offering (IPO).
Some have accused private equity-backed funds of squeezing extra cash out of the companies they buy by hollowing them out.
Jhaveri said in the interview that his investors may be private investors, but that they are not conventional private equity investors.
Kuvare has backing from Altamont Capital Partners, a private equity firm; Makena Capital Management, an investmentmanager that works with endowments and foundations; and Access Holdings, a private investment firm that investments money for family offices and large institutions
An ordinary private equity-backed financing arrangement has an expiration date, or some other mechanism for setting a specific funding duration, Jhaveri said.
Kuvare is different, because its funding arrangement has no set time limit, and all three of the investors have very long time horizons, Jhaveri said.
Because of those long time horizons, “we can be more dynamic and more flexible,” Jhaveri said. “We can make investments that take a little more time to bear fruit.”
Managers want to build a good insurance business, not just maximize short-term returns, he said.
Kuvare managers are primarily interested in companies that sell life insurance and annuities.
The managers also like to see units that sell products such as accident insurance, disability insurance or supplemental health insurance.
“We like the fact that we can build a diversified organization,” Jhaveri said.
Kuvare is not interested, however, in stand-alone long-term care insurance.
5. Operating Strategy
Jhaveri believes that Kuvare’s ability to invest in upgrading a life insurer’s technology is one reason Kuvare may be able to increase a life insurer’s profits without squeezing the life insurer in a way that’s bad for the employees, the distributors or the customers.
The company announced in February that it will get technology support services from SE2.
Kuvare has been letting the companies it acquires stay in place with their current employees, their current managers, their current brands, and even their current benefit plans.
Jhaveri said Kuvare has been trying to take a mixed, balanced approach toward using the new, automated sales systems and continuing to offer consumers access to the human touch provided by live-human agents and brokers.
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