OPTIS Partners publishes a quarterly report on insurance agency mergers and acquisitions in the US and Canada
The first half of 2020 saw forty fewer agency mergers and acquisitions as compared to the first half of 2019 according to the latest data provided to Agency Checklists by OPTIS Partners. In terms of numbers, there were approximately 288 insurance agency transactions recorded during H1-2020 versus as compared to 328 in 1H-2019. This marks the lowest six-month total for insurance agency mergers and acquisitions since 2017.
“Some of the active buyers continued to push forward with their M&A strategy while others have slowed their acquisition pace until more is known about the impact and duration of the pandemic,” said Timothy J. Cunningham, managing partner of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
OPTIS Partners’ data analyzes the selling of both Property & Casualty insurance agencies and Employee Benefits agencies in both the U.S. and Canada.
Highlights from the 1H-2020 Report
As it typically does the quarterly report groups the Buyers and Sellers into four major groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others. The following is the data the report collected on each of these groups:
- Acrisure led all buyers with 39 transactions in the first half-year, consistent with their total in 2019.
- Other top buyers were Broadstreet Partners with 30 deals (up from 17 in 2019),
- Hub International and Assured Partners (both with 19 but down from 26 and 20, respectively), and
- World Insurance Associates LLC with 12 transactions in 2020 (up from 8 in 2019).
- Several other historically active buyers saw their transaction count drop substantially through six months in 2020.
- Gallagher declined from 16 to eight; Alera Group decreased from 11 to five, and NFP Corp. dropped from nine to two.
Private equity buyers continue to fuel most merger & acquisitions.
As noted in various reports of past quarters, the vast majority of insurance agency mergers and acquisitions over the past decade derive from private equity buyers. For the first half of 2020, for example, OPTIS Partners’ states that approximately 69% of all purchases in 1H-2020 were by private equity buyers. This up from last year’s number where private equity buyers represented 65% of all transactions during the entire year. The following are some more statistics from the report:
- Acquisitions by the publicly traded firms, dropped from 33 transactions in 2019 to 30 in 2020.,
- Nine transactions, however, were completed by the new public firm Baldwin Risk Partners.
- P&C sellers accounted for 143 of the total 288 transactions (50%), consistent with their percentage of the totals in recent years.
“We expect the slow-down to continue given the recent explosion of the COVID-19 infections and anticipated reinstatement of various social and business restrictions,” said Daniel P. Menzer, partner. Until businesses can return to some degree of normalcy, buyers are unlikely to be able to accurately assess the short-term and long-term impact of this pandemic, making acquisitions much riskier for them.”
Massachusetts mergers & acquisitions versus the national statistics
Surprisingly based upon Agency Checklists own data, Massachusetts did not see a huge decline in agency purchase and sales during 1H2-2020. In fact, as we reported this week, the second quarter of 2020 (Q2-2020) actually had the same amount of transactions as compared to the same quarter in 2019 (Q1-2019).
For those who are looking for more information on the Massachusetts marketplace during Q1-2020, please refer to “Insurance Agency Mergers & Acquisitions In Massachusetts, Q2-2020.”
How to access the full OPTIS Partners’ Report
The OPTIS Partners report is based on its own database which tracks the most active acquirers and other announced transactions. As such, while it is a reasonably accurate indication of deal activity in the sector, the actual number of agency acquisitions was far greater than the number reported, as many buyers and sellers do not report transactions, and some acquirers do not report small transactions.
For those interested in accessing the full OPTIS Partners Report, it can be accessed here: 2020 Agent & Broker Mergers & Acquisition Update.
