Skip Ribbon Commands
Skip to main content

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

 

 ‭(Hidden)‬ Catalog-Item Reuse

Insurance Agency M&A Broke All-Time Record in 2021

The increase in agency merger & acquisition rates was caused by investors flush with capital continuing to meet an increasing supply of aging owners taking advantage of all-time high valuations.
Sponsored by
insurance agency m&a broke all-time record in 2021

There were 1,034 announced insurance agency mergers and acquisitions in 2021, up 30% from the 795 reported in 2020, according to OPTIS Partners' North American Agent & Broker 2021 Year-End Merger & Acquisition Report

The fourth quarter of 2021 was the star of the show with 384 deals—a 26% increase over the same period in 2020, which was a 68% increase over the same quarter in 2019. Further, the fourth quarter of 2021 also saw 32% more deals than the 290 transactions reported for the third quarter of 2021, as sellers looked to avoid a potential tax increase.

The prolific agency M&A rates were caused by investors flush with capital continuing to meet an increasing supply of aging owners looking to take advantage of all-time high valuations while capital gains tax rates are low, OPTIS Partners said.

“If 2020 was a boom year for mergers and acquisitions, 2021 was a virtual explosion," said Steve Germundson, partner at OPTIS Partners. “The fourth quarter rush to close deals by year-end clearly taxed the sellers' deal teams, legal counsel, and due-diligence providers. We expect a bit of a first-quarter respite before the cycle picks up again."

Acrisure continued to lead all buyers with 122 transactions in 2021, 17% higher than their five-year average. However, for the first time in many years, it had competition—PCF Insurance completed 99 transactions, up from 36 in 2020. Other top buyers were HUB International with 61 acquisitions, down from 65 in 2020, and High Street Partners with 56, up from 9 in 2020. Assured Partners with 51 deals, up from 38 in 2020, rounded out the top five. 

Private equity-backed or hybrid buyers continued to dominate transactions, accounting for approximately 3 in 4 of total transactions. The roaring activity in that group accounted for virtually all M&A growth, while other categories have remained relatively stable over the past decade. Acquisitions completed by privately held firms did decrease slightly to 15%, and publicly traded companies dipped to 6%. The most active privately-owned buyers in 2021 were Heffernan Insurance Brokers, which made 11 deals, up from 8 in 2020, and Liberty Company Insurance Brokers with 10 transactions, up from 1 in 2020.

Property-casualty agencies continued their trend as the agencies most often sold—accounting for 53% of all transactions in 2021.

“The industry is in unprecedented times," said Tim Cunningham, managing partner of OPTIS Partners. “We're coming off a six-quarter stretch that heretofore seemed unthinkable. The brokerage industry continues to prove resilient to economic challenges ranging from terrorism to economic meltdowns and even COVID."

“Investors love this resiliency and predictability," Cunningham continued. “While private-equity investors will likely be able to absorb increases in loan interest rates, we will be paying attention to their leverage. This has gone under-noticed for a couple of years but may become a hot topic if rates increase significantly."

AnneMarie McPherson is IA news editor. 

16318
Thursday, February 3, 2022
In the News