A look at the national rate of M&A acquisitions this quarter courtesy of OPTIS Partners
While the second quarter did not see the same frenzy of reported transactions as in the first quarter of 2017, the pace of insurance agency mergers and acquisitions was still strong per OPTIS Partner’s in its latest quarterly report.
At the close of Q2, OPTIS Partner’s latest quarterly report says that there were 135 reported insurance agency mergers and acquisitions, as compared to 185 in the first quarter. Overall, during the first six months of the year, an unprecedented number of 320 transactions have been completed.
“As we predicted, 2017 is turning out to be another banner year for M&A,” said Timothy J. Cunningham, managing director of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. “New private-equity capital continues to flow into the broker space, indicating investors remain bullish on the industry.”
The quarterly report from OPTIS Partners includes data covering U.S. and Canadian insurance agencies that either sell property & casualty insurance, employee benefits, or both P&C and employee benefits. The report also includes transactions involving wholesalers and managing general agency brokerage businesses.
“Most economic, insurance and business indicators are generally favorable, notwithstanding the modest uncertainty with the possible repeal or replacement of the Affordable Care Act,” said Daniel P. Menzer, CPA, partner with OPTIS Partners. “Buyers are still being very aggressive in their valuations of prospective acquisition partners, and thus far there has been no shortage of willing sellers.”
Who bought what in the first quarter of 2017?
Each quarter, The OPTIS Partners report breaks down insurance agency buyers into five different groups:
- private-equity (PE) backed brokers,
- privately held brokers,
- publicly held brokers,
- banks, and
- all others.
This quarter, as predicted at the start of the year, PE-backed buyers continued to fuel the growth in M&A acquisitions, completing a total of 75 deals this quarter. This is 15 more than a year ago, when PE-backed buyers were involved in 60 purchases and sales of agency for the same time period.
After PE-backed Buyers, privately held brokers reported 39 deals in Q2, making them the second largest group of agency buyers this year. Privately held brokers also increased the number of deals they were involved in, as compared to the same time last year in Q2 2016, when they were involved in 36 deals.
On a downward trend, both publicly traded brokers and banks were involved in less agency acquisitions than a year ago. While publicly traded brokers were involved in 12 completed deals, this number was down two from the 14 they were involved in during the same time period just a year ago. As for banks, they were just four bank acquisitions reported this quarter, as compared to 7 in Q2 in 2016.
Remaining steady were the insurance companies/other categories which included five agency acquisitions/transactions this year, the exact same number as last year.
Who sold what in the first quarter of 2017?
Predominantly P&C insurance agencies were again the most likely to sell in this quarter, with a reported 75 announced transactions. There were 24 reported P&C/benefits brokers agency sales, down from 30 in the first quarter of the year. The remaining 29 reported transactions belonged to employee benefits agencies.
Observations on the Massachusetts marketplace
According to OPTIS Partners and Agency Checklists’ records, there were a total of 10 announced mergers and acquisitions announced in the Commonwealth during Q2 2017. This is three more than in the first quarter.
Unlike the rest of the country, however, the largest buyers of P&C agencies in the Commonwealth continue to be local, privately-held insurance agencies. For example, two of the leading agency buyers here are Cross Insurance and Kaplansky Insurance, both local, family-owned independent agencies based in Bangor, Maine and Needham, respectively. Cross Insurance has announced three agency acquisitions this year, while Kaplansky Insurance has announced two.
As a result, while M&A activity remains strong, the majority of the buyers and sellers continue to be connected to the Commonwealth rather than from around the country.
So what is happening right here in Massachusetts?
The following are the agency acquisitions that Agency Checklists has tracked and written about in 2017.
January 2017 (Q1)
February 2017 (Q1)
March 2017 (Q1)
April 2017 (Q2)
May 2017 (Q2)
June 2017 (Q2)
Our exclusive list of M&A transactions in Massachusetts
Please note that while we try and keep our own data up-to-date as much as possible, we cannot guarantee that we have included every transaction that has taken place in the Commonwealth so far this year.
If you know of an agency that was bought or sold and does not appear on this list, please help us out by letting us know here.