OPTIS Partners is an investment banking and financial consulting firm for the insurance industry
As it has done for the past few years, Chicago-based OPTIS Partners released its annual report on the state of Merger & Acquisition activity for Agents & Brokers in 2015. Citing another record setting year, the firm says that merger & acquisition activity reached record levels last year with a total of 451 transactions occurring in the United States and Canada.
…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
In comparison, the total number of transaction in 2014, also record-breaking at the time, totaled only 357, 94 less than 2015. OPTIS Partners’ notes that actual sales were almost certainly more than 45, as many acquirers simply do not report small transactions. With that said, the 451 transaction figure identifies only reported transactions.
As is obvious from the graph below, 2015 transactions also easily surpassed the total numbers for the past several years. For example, 2015 had more than double the amount of transactions for both 2009 and 2010. The following graph from the OPTIS Partners report further illustrates the disparity of 2015 versus the previous seven years.
Announced M&A Transactions Levels: 2008 to 2015
Surveying the trends in Mergers & Acquisitions over the last five years, while 2012 was a watershed year with transactions first surpassing 300, the past two years (2014 & 2015) have far outpaced the other previous five years. the year with the highest amount of M&A Activity, with approximately 300 transactions taking place during that calendar year.
The following chart from the OPTIS Partners report takes a look at the past 15 years of mergers & acquisitions activity across both the U.S. and Canada. What is more than obvious, is the huge increase in activity in 2015, signaling a further consolidation of the market.
Who is leading the growth in insurance agency-brokerage activity in 2015
OPTIS Partners’ report attributes the huge upsurge in transactions in 2015 as further evidence of “…a steady, entrenched shift in buyer dynamics.” Pushing the consolidation of the market is private equity backed firms.
According to the consulting firm an overwhelming majority of the buyers in 2015 were private equity(“PE”)-backed entities, essentially responsible for all of the year-over-year growth. On the flip side, the seller side was dominated by P&C agencies.
The following graph is a depiction of the different buyer types in reported transactions over the past seven years.
The consulting firm acknowledges in the report that this is the first time that any particular type of buyer group has accounted for the majority of transactions.
The Top Ten National Buyers in 2015
|1. Acrisure||PE||Genstar Capital||56||22||11||0|
|2. AssuredPartners||PE||Apax Partners||38||26||19||19|
|3. Hub International||PE||Hellman & Freidman||37||31||25||21|
|5. BroadStreet Partners||PE||Pension Fund||26||15||13||22|
|6. Confie||PE||ABRY Partners||19||13||14||18|
|7. Brown & Brown||Public||12||7||6||15|
|8. NFP||PE||Madison Dearborn||11||7||5||6|
|9. USI||PE||Onyx Partners||9||11||9||10|
|10. The Hilb Group||PE||ABRY Partners||8||4||2||3|
|10. Alliant Insurance Services||PE||Stone Point Capital/KKR||8||3||2||1|
In total, these entities acquired 251 of the total 451 agencies sold in 2015.
M&A Activity in Massachusetts in 2015
After reviewing OPTIS Partners’ 2015 report, Agency Checklists wrote to OPTIS Partners’ Certified Merger & Acquisition Advisor, Daniel P. Menzer, CPA to glean more information about Massachusetts and the M&A activity occurring in the Commonwealth over the past year.
First of all, while M&A Activity in Massachusetts has been active in 2015, it is does not lead the nation and in fact comes in as only the 15th most active state. The following is the company’s ranking of the top 15 states with the most M&A Activity in 2015:
- New York
- North Carolina
- New Jersey
According to Mr. Menzer, in 2014, there were a total of 17 merger & acquisition transactions in the Commonwealth. In comparison, in 2015, there were 18 transactions. While this figure shows little change from the prior year with deals increasing only by >25%, Mr. Menzer cautions that this result could just be timing rather than a trend.
“With a relatively small sample size, just Massachusetts,” he explained, “… it’s hard to draw meaningful conclusions. He also emphasized that while OPTIS Partner’s does try and get the most complete picture of M&A Activity available, it is unable to capture every transaction occurring in the Commonwealth.
Mr. Menzer went on to state, however, that while Massachusetts may have not had the most transactions in the nation, out of the top 15 states, it did show the highest variance of actual v. pro rata transactions. “…So you’re well ahead of the game on a per capita basis,” explained Mr. Menzer, writing that it was, “… [n]ot terribly surprising given the economic forces in the state.”
On a final note, he said the most surprising observation about the rate of M&A Activity in Massachusetts was the type of buyers who were dominating the market here. “I am a little surprised at the low number of Private Equity backed firms making acquisitions in the state,” he noted as compared to the other states with high levels of M&A Activity.
Massachusetts Deals in 2015
|Buyer||Buyer Type||Transaction Date||Agency Sold|
|Duffy Insurance Agency||Broker – Private||January 2015||Connolly Insurance Agency|
|Clark Insurance||Broker – Private||January 2015||Cooney Agency|
|Eastern Bank||Bank||February 2015||James J. Sullivan Agency|
|FBInsure||Broker – Private||February 2015||Henry L. Newbury Insurance|
|Kaplansky Insurance||Broker – Private||March 2015||North State Insurance Agency|
|Cross Insurance||Broker – Private||March 2015||Corcoran & Havlin Insurance Group|
|MTM Insurance Associates||Broker – Private||April 2015||Minichiello Insurance Agency|
|Kaplansky Insurance||Broker – Private||May 2015||Congress Insurance|
|Gallagher||Broker – Public||June 2015||William Gallagher Associates Brokers Inc.|
|Brown & Brown||Broker – Public||June 2015||Strategic Benefit Advisors Inc|
|Hub International||Broker – PE||August 2015||Doctors Insurance Services of New England, Inc.|
|Eastern Bank||Bank||November 2015||Northwestern Benefits Associates|
|Orchid Underwriters Agency LLC||Broker – PE||November 2015||Platinum Partners|
|US Risk Insurance Group||Broker – Private||December 2015||Matias Underwriters, LLC|
|Woodruff-Sawyer & Co.||Broker – Private||December 2015||Capstone Insurance|
|Cross Insurance||Broker – Private||December 2015||Knapp Schenck & Co.|
|Tarpey Insurance Group, Inc.||Broker – Private||December 2015||Wilson Insurance Agency|