There were 490 announced insurance agency mergers and acquisitions during the first three quarters of the year, according to OPTIS Partners’ M&A database. It was the highest nine-month total ever, beating the 481 deals announced in 2018.
The data covers U.S. and Canadian agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and those selling only employee benefits.
There were 158 transactions in the third quarter alone, making it the second most-active third quarter ever.
“Agency valuations continue pushing new upper limits, and there are no signs of any slowdown in M&A activity,” said Daniel P. Menzer of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
Deals by Buyer Type
The OPTIS Partners report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
PE/hybrid buyers continue to lead all buyer groups with 66 percent of the total transactions through the first nine months (320 in total). Acquisitions by privately owned agencies were the next most active group, accounting for 20 percent of deals.
For the nine-month period, Acrisure led all buyers with 71 transactions, followed by Hub International Limited (37), Gallagher (27), Broadstreet Partners (27), and AssuredPartners (26).
Deals by Seller Type
The reports break down sellers into four groups: property & casualty brokers, P&C/benefits brokers, employee benefits agencies, and all others.
Sales of P&C agencies continue to dominate the seller landscape with 252 announced transactions, followed by employee benefits agencies (123 sales), P&C/benefits brokers (63 deals), and all others (52 transactions).
“Recent economic data is somewhat mixed but generally less optimistic than in recent periods. We’ll have to wait and see what, if any, impact this has on buyer appetites and valuation practices,” said Timothy J. Cunningham, managing partner with OPTIS Partners.
A few of the larger buyers have been acquiring stand-alone wealth management/investment advisory firms. Thus far, OPTIS has not included these transactions in its report.
Canadian Activity
37 out of the 490 reported deals took place in Canada, representing approximately 7.6 percent of the total, the highest percentage of Canadian-based sellers, and second only to California (65) in the number of transactions in 2019.
Not all transactions are announced, so the actual number of agency sales undoubtedly exceeded the number reported, according to Menzer.
“But our data collection process is consistent from period to period and includes a variety of sources. We’re confident the deal activity measured over time reflects of the overall M&A marketplace,” he said.
The full report can be read at http://optisins.com/wp/2019/10/september-2019-ma-report.
OPTIS Partners was ranked in the top five most active agent-broker M&A advisory firms for 2014 – June 2019 by S&P Global Market Intelligence.
Focused exclusively on the insurance-distribution marketplace, Chicago-based OPTIS Partners (www.optisins.com) offers merger & acquisition representation for buyers and sellers, including due-diligence reviews. It provides appraisals of fair market value; financial performance review, including trend analysis and internal controls; and ownership transition and perpetuation planning.