Deals for property & casualty and benefits brokers in US and Canada explode past pre-pandemic levels, OPTIS Partners reports
CHICAGO, IL / ACCESSWIRE / January 20, 2021 / There were 744 announced insurance agency mergers and acquisitions in 2020, up nearly 20% from 649 reported in 2019. The surge resulted from the pent-up supply of pending transactions from earlier in the year coupled with sellers looking to avoid an expected increase in capital gains taxes.
The 290 deals during the fourth quarter of 2020 marked a 68% increase from 173 in 2019. It was 61% more than the 180 transactions reported for the third quarter of 2020, as the country learned how to cope with the pandemic.
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.
'Most buyers continue to unabatedly pursue deals, though several have drawn back somewhat as they integrate acquired firms. There were also new buyers coming on line that have made significant headway with their acquisitions,' said Steve Germundson, partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
Report tracks activity by buyer and seller types
The report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others. Sellers are classified as property & casualty brokers, property & casualty and employee benefits brokers, employee benefits brokers, and all others.
Acrisure continues to lead all buyers with 108 transactions in 2020, which is consistent with their four-year average of about 100 deals per year. Other top buyers were Hub International with 64 acquisitions (up from 52 in 2019) and Broadstreet Partners with 58 deals (up from 34 in 2019), and newcomer to the top of the list, World Insurance Associates with 42 (up from 18 in 2019). Other buyers considered 'most active' include PCF Insurance with 36 (up from 6) and OneDigital with 29 (up from 17 in 2019).
Several other historically active buyers saw their transaction count drop somewhat in 2020 including AssuredPartners, at 38 compared to 44, Gallagher from 34 to 23 and Hilb Group from 25 to 22.
Private equity buyers dominate
The private equity-backed/hybrid group of buyers continues to dominate the volume of transactions at approximately 70% of the total. Acquisitions completed by privately held firms and publicly traded companies held steady at 17% and 9% of all deals, respectively.
P&C sellers accounted for 397 of the total 774 transactions (51%), consistent with their percentage of the totals in recent years.
'While it may not be quite as active as 2020, 2021 will probably be very active as a new wave of sellers looking to avoid an expected capital gains tax increase or simply to sell with a growth story emerge. Agency valuations and multiples for high-quality firms should continue to reach new upper limits as demand remains strong and the supply of quality firms is reduced,' said Tim Cunningham, managing partner of OPTIS Partners.
The full report can be read at https://optisins.com/wp/2021/01/2020-ma-report.
OPTIS Partners has consistently been ranked in the top six most active agent-broker M&A advisory firms for 2014 - 2019 by S&P Global Market Intelligence.
Focused exclusively on the insurance-distribution marketplace, Chicago-based OPTIS Partners (www.optisins.com) offers merger & acquisition representation for buyers and sellers, including due-diligence reviews. It provides appraisals of fair market value; financial performance review, including trend analysis and internal controls; and ownership transition and perpetuation planning.
Contact: Tim Cunningham, OPTIS Partners, firstname.lastname@example.org, 312-235-0081
Dan Menzer, OPTIS Partners, email@example.com, 630-520-0490
Steve Germundson, OPTIS Partners, firstname.lastname@example.org 612-758-0598
Henry Stimpson, Stimpson Communications, 508-647-0705 Henry@StimpsonCommunications.com
SOURCE: OPTIS Partners
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