Insurance M&A Activity Declines

Source: PIA Alliance | Published on November 8, 2023

USI acquires Texas agency

OPTIS Partners, which tracks insurance mergers and acquisitions, said M&A activity in the first three-quarters of 2023 is the largest decline it has ever recorded.

There were 534 deals announced in the U.S. and Canada from January through September 30th. That’s down 27% from the 720 in the same time period in 2022.

OPTIS Partners partner, Steve Germundson said the third quarter there were 168 transactions. That’s down 34% from the same time frame of 2022. He said the slowdown is because of “rising costs of capital, the increase in leverage, and a smaller supply of business owners.”

Here’s the list of top buyers:

  • Broadstreet Partners — 43 transactions
  • Hub International — 37 transactions
  • Inszone Insurance Services — 27 transactions
  • Leavitt Group — 27 transactions
  • World Insurance Associates — 24 transactions
  • Arthur J. Gallagher — 25 transactions

The usual count leaders, Acisure and PCF saw their activity slowing considerably. How much so? Combined they did 81% fewer transactions this year than they did in all of 2022.

OPTIS Managing Partner Tim Cunningham said though deals are down, not all is lost.

“We continue to see valuations holding, especially for attractive sellers. The economic change of rising interest rates and a reduction in the supply of sellers has fundamentally changed the value proposition that the insurance distribution business represents,” Cunningham said. “It has not reduced the demand from a still robust group of buyers. We expect the valuation environment to hold rather steady, though we could see that soften slightly for less attractive firms over the coming quarters.”

More numbers:

  • 67% of the deals were done by private equity-backed hybrid groups
  • P&C only agencies accounted for 62%