2024 insurance agency mergers slow, show signs of surge in 2025

The pace of insurance agency mergers and acquisitions slowed in 2024 but there are signs of a resurgence this year, according to analysts.

There were 750 announced insurance agency mergers and acquisitions in 2024, according to a report by investment banking and financial consulting firm OPTIS Partners. But that was down about 10% from the 833 reported in 2023. In the second half of 2024, deals jumped 21% from the first six months, but down 8% compared to the second half of 2023, OPTIS said. The 199 deals during the fourth quarter of 2024 were 6% lower than the prior quarter and 16% lower than during the same period in 2023.

“There is a general pullback in the pace of acquisition for more than half of the historically most-active buyers, said Steve Germundson, an OPTIS partner.

However, Germundson said, firms like Broadstreet Partners and ALKEME are picking up their pace of M&A activity, and others like PCF and Relation are moving again after brief slowdowns.

That jibes with predictions from other firms, such as Novidea, creator of a cloud-native, global insurance management platform for brokers, agents, and MGAs, which forecast M&A will make a comeback this year, particularly in the insurtech market.

VC investment in insurtechs 'will increase'

“As the U.S. economy continues its post-pandemic recovery, VC investment in insurtechs will increase as interest rates begin to normalize,” a Novidea release said. “Carriers will increasingly consider acquiring MGAs. For these deals to be successful, the right insurtech platform will smooth the integration of purchased companies, facilitating automated and standardized processes across different lines and business types - such as wholesale, retail, and reinsurance - as they are acquired.”

Three giant deals made news last year. In April AON purchased NFP for $13 billion. In November Marsh McLennan Agencies closed on McGriff Insurance Services for $7.75 billion. In December Arthur J. Gallagher announced an agreement to buy AssuredPartners for $13.45 billion, which is expected to close by the end of March.

The number of unique buyers in 2024 at 98, was 20% lower than the 122 reported for 2023 and 45% lower than the 177 specific buyers during the peak in 2017.

Broadstreet Partners leads mergers

“The biggest jump in deal volume was made by Broadstreet Partners, which led all buyers with 90 closed transactions, a 53% year-over-year increase and nearly twice the pace of its previous 5-year average,” the OPTIS report said.

Hub International followed with 61 completed transactions (down from 66 in 2023) and Inszone Insurance Services with 48 deals (up from 46 in 2023). Other top buyers included Patriot Growth Insurance Services with 35 acquisitions (36 in 2023), Arthur J. Gallagher with 31 acquisitions (31 in 2023), and Leavitt Group with 30 acquisitions (34 in 2023).

While private-equity-backed buyers have led the charge in deal activity with 72% of the transactions in 2024, this group consistently accounted for 69%-75% of the transactions in each of the last seven years. Transactions led by privately owned firms declined from an all-time high in 2023 at over 22% of the total to 17% in 2024.

Privately owned buyers

The most-active privately owned buyers in 2024 were Leavitt Group at 30 transactions, TrueNorth Companies at 11, and Heffernan Insurance Brokers at 9.

Marsh McLennan tripled its deal activity in 2024 with 12 acquisitions, and Arthur J. Gallagher was the only publicly traded broker that did more than 15 deals in the U.S. and Canada with 31 in 2024, down from 36 in 2023.

Property and Casualty sellers accounted for 477 of the total 750 transactions, while 102 employee benefits specialists were sold.

“The M&A market is in a fairly steady state regarding both the number of transactions in the year and the pace of them throughout the year. said Tim Cunningham, managing partner of OPTIS Partners. “This is the second consecutive year in which there was no mad dash to closing a large number of deals at year-end.”

Cunningham expects more large deals in the next 24 months, though perhaps not at the same size as some already closed.

“Nonetheless, the chase for scale continues, and this should buoy seller valuations, especially for the better firms, absent a major change in the underlying economy or the insurance marketplace,” he said.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].