Insurance Agency M&As through Nine Months of 2018 Hit Second-Highest Total: OPTIS Partners

There were 463 announced insurance agency mergers and acquisitions during the first three quarters of the year, according to OPTIS Partners' M&A database. It was the second-highest nine-month total, trailing only 2017 when 466 transactions were reported.

Source: OPTIS | Published on October 12, 2018

Insurance M&As slow down

The data covers U.S. and Canadian agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and those selling only employee benefits.

There were 174 deals reported in the third quarter of 2018, the highest third-quarter total. It trailed only the first quarter of 2018 when 186 transactions were reported.

"The impressive level of M&A activity seen during the quarter and throughout 2018 is a continuation of what we've seen over the last several years," said Daniel P. Menzer of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. "Buyers, in particular, the Private Equity/Privately Funded group, continue to aggressively pursue agency owners and are driving valuation multiples to unprecedented levels across the board."

The OPTIS Partners report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.

For the nine-month period, Acrisure led all buyers with 70 transactions, followed by Hub International Limited (47), AssuredPartners (30) and Arthur J. Gallagher and Broadstreet Partners (23 each). For the quarter, Acrisure led all other buyers with 29 transactions, followed by Hub International Limited (14) and Assured Partners (11)

PE/hybrid buyers continue to lead all buyer groups with more than 65 percent of the total transactions for the quarter (114 in Q3-2018 vs. 88 in Q3-2017) and nearly two-thirds of the transactions through the first nine months of the year (311 in total). Acquisitions by privately owned agencies were the next most active group but were down from last year (89 in 2018 vs. 111 through nine months of 2017).

Sales of P&C agencies continue to dominate the landscape of sellers with 250 announced transactions, followed by employee benefits agencies (114 sales), P&C/benefits brokers (56 deals), and all others (43 transactions).

"Since we're only capturing information on publicized transactions and activities of the most active buyers, not all transactions are included in our totals. The actual number of agency sales is certainly much higher than what we’re showing" said Timothy J. Cunningham, managing partner with OPTIS Partners. "In spite of this, we believe the agency M&A activity shown in this report is a meaningful barometer of the overall M&A marketplace."

The full report can be read at http://optisins.com/wp/2018/07/june-2018-ma-report/.