Insurance Agency M&A’s Soared in 2017
Insurance agency mergers and acquisitions activity soared by 31% in 2017. This continued consolidation of the retail insurance space is driven by a growing number of retiring agency owners without a perpetuation plan and a growing number of private equity buyers and larger brokerage firms looking to acquire as competition to grow organically has grown stiff. We’re on the forefront of this consolidation effort and looking to buy agencies within our licensed range (IN, IL, KY, OH, PA, and TN). Please contact us if you or someone you know is looking for an exit strategy out of their agency.
This article from Business Journal:
Mergers and acquisitions of insurance agencies last year broke all records in 2017, according to OPTIS Partners’ annual report. The OPTIS database recorded 604 deals in the United States and Canada in 2017, a 31 percent jump from 461 in 2016.
“This whopping increase exceeded expectations,” said Timothy J. Cunningham, managing director of OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. “We expect the beat to go on in 2018.”
The report covers agencies selling primarily property/casualty insurance, agencies selling both P/C and employee benefits, and employee benefits agencies.
In 2017, private equity/hybrid buyers accounted for 382 transactions, 63 percent of the total, compared with 56 percent in 2016.
“The concentration of PE /hybrid buyers has grown steadily since we began tracking deals in 2008 when only four of the top 10 buyers had private equity backing,” he said.
The 2017 report lists PE/hybrid as a new buyer category. It includes all private-equity-backed buyers plus certain privately owned buyers with material internal or external financial support for acquisitions.
The top five buyers were Acrisure (92 acquisitions), Hub International (49), Alera Group (38), Broadstreet Partners (32) and Gallagher (30). All were in in the PE/hybrid category except publicly owned Gallagher.
Privately owned brokerages completed 128 transactions from 105 unique buyers in 2017, up from 114 acquisitions from 87 separate buyers in 2016. This was a record number both of deals and unique buyers.
By seller type, property/casualty-focused agencies dominated the list. They accounted for 301 of the 2017 transactions, 49.8 percent of the total.
Employee benefits brokers accounted for 174 transactions, 28.8 percent of the total, nearly a 90 percent increase from 2016.
“The explosion in employee benefits agency sales was fueled by Alera, Acrisure, and several other active acquirers,” Cunningham said.
Agencies selling both property/casualty and employee benefits coverages were sold in 86 deals last year.
There were 43 sales in the “other” category, which includes managing general agents, third-party administrators and other types of sellers.