2018 Shaping Up As Second-Highest For Insurance Agency M&A Activity

M&A activity surges in the third quarter with 174 deals reported

The third quarter of 2018 has seen a renewed fervor of M&A transactions, according to the latest OPTIS Partners’ quarterly report on mergers and acquisitions across the country.

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.

during Q3-2018, 174 deals were announced bringing the total of announced agency acquisitions from the past nine months to 463. As a result, 2018 has logged the highest Q3 or nine-month total, and the second highest year after 2017, which recorded the highest number of announced transactions with 468.

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.”

Comparing the first three quarters of 2018

Looking at the first half of 2018 (1H-2018), Q1-2018 and Q2-2018 combined had a total of 280 transactions, in comparison to the 333 transactions reported during the first half of 2017 (1H-2017).

As is apparent from the graph below, while Q2-2018 may have signaled a slower pace, the
“surge of activity” in Q3-2018 helped 2018 to catch up to the 2017-level of M&A Activity.

Acrisure continues to be the top buyer nationally in Q3-2018

The leading buyer in Q3-2018 continues to be Acrisure with a total of seventy (70) announced transactions recorded during the past nine months. After Acrisure, the second largest buyer is Hub International with a total of 47 acquisitions this year, followed by AssuredPartners (30), and then both Gallagher and Broadstreet Partners (23 each).

The report notes that Agency valuations continue to rise with no sign of stopping, even in the face of recent interest rate increases.

Agency Checklists, MA Insurance News, Mass. Insurance News,2018 Insurance Agency M&A Activity, OPTIS Partners Quarterly Reports, Insurance Agency M&As in Massachusetts — *Graph OPTIS Partners*

Additional takeaways from the latest report

As has been the case for the past couple of years, PE/hybrid buyers continue to dominate the buyer category. This quarter this group claims 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). While the next buyer group, privately-owned agencies, were the most active, their M&A activity was down from a high of last year (89 in 2018 vs. 111 through nine months of 2017).

The 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.”

Agencies Acquired in Massachusetts through Q3-2018

As we do every quarter, the following is our listing of the agency acquisitions that Agency Checklists has tracked and written about in the first quarter of 2018, along with some contributions from OPTIS Partners regarding any agency acquisitions that we may have missed.