Deals for property & casualty and benefits brokers in US and Canada were up 16% in first half, OPTIS Partners reports
CHICAGO, IL / ACCESSWIRE / July 18, 2022 / There were 427 announced insurance agency mergers and acquisitions during the first half of 2022, up 16% from 369 for the same period in 2021, according to OPTIS Partners' M&A database.
The pace in the first six months of 2022 is 13% above the previous first-half five-year average, a period regarded as the most active M&A market ever. Following the typical first-quarter lull, the second quarter of 2022 shot up 20% in volume to become the fourth-most-active quarter of all time.
Related businesses drive growth
"One of the drivers is the expanded appetite of the most active buyers to look at businesses adjacent to the agency/brokerage business," said Steve Germundson, a partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. "Some 53 of the 427 announced deals came out of life/financial services, actuarial and human resources consulting, technology, and other business related to insurance distribution."
It was not too surprising that the number of deals done in the traditional agency/brokerage segment was almost flat at a 1.5% increase, said OPTIS managing partner Timothy J. Cunningham.
"There simply aren't the same number of sellers there as in the past," he said. "But buyers still have a lot of capital to deploy, and they are finding opportunities to fill other needs in their businesses with firms in this expanded space."
Report covers four types of sellers and buyers
OPTIS reports have covered three types of sellers: U.S. and Canadian agencies offering primarily property-and-casualty insurance, agencies offering both P&C and employee benefits, and those offering only employee benefits. Because buyers have broadened their acquisition targets, OPTIS for the first time in 2022 is including all other sellers-life/financial services, consulting, and other businesses associated with insurance distribution.
The report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
PCF, Acrisure and Hub Lead Buyers
The ten most-active buyers accounted for 55% of all the deals announced so far in 2022 while 72 buyers accounted for the remaining 45% (43 buyers made only one acquisition).
Among buyers, PCF took the top spot for the first time with 48 deals done so far in 2022. This is a 70% increase over the same period in 2022. Acrisure with 43 and Hub with 35 followed, both of them marking 40% increases over the prior year.
Others that saw significant jumps in their deal count were Inszone at 20 (up nearly seven-fold), Patriot Growth at 16 and Keystone Agency Partners at 10 (both tripled in count). Some active buyers dialed back activity, including AssuredPartners at seven (down 68%), World Insurance at nine (down 36%), Hilb at seven (down 22%), and BroadStreet at 16 (down 16%).
Other top buyers included High Street Partners (20) and Relation (16 deals).
The private equity-backed/hybrid group of buyers maintained their dominance in the buying spree with 76% of all transactions for the first half of the year, while transactions between private parties accounted for 15%.
P&C Agencies Dominate Sellers
A total of 83% of the businesses sold were in traditional retail insurance distribution. P&C sellers accounted for 253 transactions (59% of the total) year-to-date 2022, benefits agencies sales totaled 53 (12%), and there were 48 sales of P&C/benefits agencies (11%). All other sellers accounted for 73 sales (17%).
"Tallies for deals so far in 2022 and conversations with buyers indicate that the second half of the year should be robust. The final tally may not be as high as 2021, but it could prove to be close," Germundson said.
The full report can be read at https://optisins.com/wp/2022/07/h1-2022-ma-report/.
OPTIS Partners was ranked in the top six most active agent-broker M&A advisory firms for 2014 - 2021 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.
Contact:
Steve Germundson, OPTIS Partners, germundson@optisins.com 612-758-0598
Tim Cunningham, OPTIS Partners, cunningham@optisins.com, 312-235-0081
Dan Menzer, OPTIS Partners, menzer@optisins.com, 630-520-0490
Henry Stimpson, Stimpson Communications, 508-647-0705 Henry@StimpsonCommunications.com
SOURCE: AnnuityAdvantage
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