White Mountains Insurance Group has entered into a definitive agreement to sell NSM Insurance Group for $1.775bn.

The specialty insurance provider will be acquired by investment funds affiliated with global investment firm Carlyle.

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NSM Insurance underwrites policies for non-profit organisations, workers’ compensation, pets, trucks and behavioural healthcare. It has 14 office locations and employs around 1,000 people.

According to its website, the company has more than one million clients.

White Mountains expects that the transaction will add around $280 to its adjusted book value per share. It will also increase undeployed capital to nearly $1.7bn.

White Mountains CEO Manning Rountree said: “The NSM team has done a tremendous job building a market-leading specialty insurance distribution platform.  It has been our pleasure to partner with them along the way.

“This transaction is a win for both White Mountains shareholders and NSM management and employees.”

Carlyle Global Financial Services head John Redett said: “Leveraging Carlyle’s deep experience supporting companies in the insurance services sector, we are thrilled to partner with NSM’s exceptional founder-led management team to help the business execute numerous upside growth drivers, including continued operational improvement, accretive M&A opportunities, and strategic investments in technology and data & analytics.”

The deal is slated to close in the second half of this year, subject to regulatory approvals and other customary closing conditions. 

White Mountains and NSM were advised by JP Morgan Securities and Cravath, Swaine & Moore on the deal.

NSM management also took legal assistance from Holland & Knight.