Skip Ribbon Commands
Skip to main content

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

 

 ‭(Hidden)‬ Catalog-Item Reuse

Agency M&A Up 13% in 2021 So Far

An aging group of owners looking at all-time high valuations and expecting future tax increases has spurred a jump in increased merger activity.
Sponsored by
agency m&a up 13% in 2021 so far

There were 553 announced insurance agency mergers and acquisitions during the first three quarters of 2021, up from 490 in 2020, according to this week's OPTIS Partners' M&A report. It was the highest recorded total for the first three quarters of any calendar year.

“Multiple factors that drive deal activity continue unabated," said Steve Germundson, partner at OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. “An aging group of owners looking at all-time high valuations and expecting future tax increases is met by a larger group of buyers needing to fuel inorganic growth."

The data covers U.S. and Canadian agencies selling primarily property-casualty insurance, agencies selling both p-c and employee benefits, and those selling only employee benefits. It breaks down buyers into four groups: private equity-backed and hybrid brokers; privately held brokers; publicly held brokers; and others.

Acrisure led the pack of buyers with 79 transactions year-to-date, far more than any other buyer and back on track with their historical pace, which had slowed earlier this year. Other top buyers were PCF Insurance and BroadStreet Partners, both with 31 deals, up from 22 and 40 in 2020, respectively; World Insurance Associates with 27, up from 22; and Hub International with 25, down from 40.

Of the 10 most active buyers, only three completed fewer deals through the first three three quarters of 2021 versus the same periods in 2020. Hub declined by 15, BroadStreet dipped by nine fewer deals, and AssuredPartners dropped by three. Relation Insurance, High Street Partners, and Alera each more than doubled the number of transactions completed.

The private equity-backed and hybrid group of buyers have completed 70% of all transactions so far in 2021, which is comparable to the same period in 2020. Meanwhile, acquisitions by privately held brokers inched upward from 18% to 20% and publicly traded broker deals slipped from 10% to 6% of total transactions as their deal count fell 32% year-over-year.

P-c sellers accounted for 313 of the total 553 transactions (57%), consistent with their percentage of the totals in recent years.

“The fourth quarter of 2021 may not reach the massive volume of deals done in the last quarter of 2020, but it will likely be close," said Dan Menzer, partner at OPTIS. “A number of active buyers have told us one of their biggest challenges is lining up legal and due-diligence providers for the remainder of the year."

 “There is nothing on the horizon that indicates a material slowing of deal activity, absent true economic disruption, even if we see a modest increase in capital gains taxes and rise in interest rates," said Tim Cunningham, managing partner at OPTIS. “During the biggest economic disruption since 2008, OPTIS has handled more deals than ever. There's just so much capital continuing to look for sound investments."

Will Jones is IA editor-in-chief. 

16162
Thursday, November 18, 2021
Perpetuation & Valuation