Insurance Agency Mergers And Acquisitions Break Record In 2015

CHICAGO—February 9, 2016—Mergers and acquisitions of insurance agencies hit an all-time high in 2015, with 451 reported transactions in the United States and Canada, according to OPTIS Partners’ annual survey. That smashed the previous record of 357 in 2014.

The report covers agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and employee benefits agencies.

“This is strong evidence of a steady, entrenched shift in buyer dynamics,” said Timothy J. Cunningham, managing director of OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. “Private-equity-backed buyers were responsible for virtually all of the year-over-year growth, while P&C agencies dominated the seller category.”

Private-equity backed agencies were 2015’s biggest buyers, making 242 acquisitions, up more than 50 percent, and represented 54 percent of the total.

“This marks the first time since OPTIS has been tracking M&A activity that any buyer group has accounted for the majority of transactions,” he said. The top PE-backed buyer was Acrisure, (backed by Genstar Capital) which made 56 acquisitions.

Privately owned insurance agencies came in second, buying 109 agencies. They were followed by public brokers (50), banks (24), and all others, including carriers (26).

On the seller side, sales of property-and-casualty-focused agencies dominated, with 57 percent of all sales. Deals for agencies selling both P&C and employee benefits accounted for 17 percent of transactions. Employee benefits agencies accounted for another 17 percent of sales, and other, 9 percent.

The actual number of sales was greater than the 451 reported, as many buyers and sellers do not report transactions, and some acquirers do not report small transactions, Cunningham said. The referenced data base tracks a consistent pool of the most active acquirers, including other announced deals, and is therefore a reasonably accurate indication of deal activity in the sector. Even so, the 26% one-year increase in activity in 2015 ranks second only to 2014’s 33% spike, a portion of which is attributable to a singular tax-fueled drop-off in deals in 2013.

The full report, 2015 Agent-Broker Mergers & Acquisitions, can be read online at http http://optisins.com/articles_and_thought_pieces/read.php?id=27.