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You are here: Home / Insurance News | Massachusetts / Insurance Agencies | Mergers & Acquisitions / Defying All Expectations 2020 Ends Up Being A Boom For Insurance Agency Mergers & Acquisitions

Defying All Expectations 2020 Ends Up Being A Boom For Insurance Agency Mergers & Acquisitions

January 26, 2021 by AC Editor

Deals surpassed past pre-pandemic levels, OPTIS Partners reports


The data is in and its seems that 2020 ending up surprising many as being a boom for insurance agency mergers & acquisitions both in the U.S. and Canada. As outlined in the latest report from OPTIS Partners, there were a total of 744 announced insurance agency mergers and acquisitions in 2020.

This number represented nearly a 20% increase over 2019, during which a total of 649 deals were reported. OPTIS Partners note that one explanation for the results is due to the “pent-up supply of pending transactions from earlier in the year.” This, coupled with the fact that many sellers may have been looking to avoid an expected increase in capital gains taxes in the coming year, set the stage for the surge in sales.

“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.


The total number of deals in 2020 was almost 20% higher than in 2019

According to the report, Q42020 saw an unprecedented increase nearly doubling the acquisitions reported during the same quarter in 2019 (Q42019). In terms of actual deals reported, there were approximately 290 completed transactions in the fourth quarter of 2020 as opposed to 173 in 2019. The increase is shown below in the graph:

As compared to Q32020, there were 290 transactions in the fourth quarter, representing a 61% increase from the third quarter of 2020, which included 180 transactions reported.

The quarterly OPTIS Partner report includes data covering both 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.’ It breaks down buyers into four distinct groups:

  • private equity-backed/hybrid brokers,
  • privately held brokers,
  • publicly held brokers, and
  • all others

As for sellers, the report categorizes them as follows:

  • property & casualty brokers,
  • property & casualty and employee benefits brokers,
  • employee benefits brokers, and
  • all others

Acrisure continues to be the most active insurance agency buyer

As will be no surprise to those who have read our recaps of these quarterly reports over the past year, Acrisure continues to be the dominant buyer within the insurance agency space. It lead all of the buyers with a total of 108 reported transactions in 2020.

OPTIS Partners estimates this is on par with its four-year average of approximately 100 deals per year. The following is a quick breakdown of the top buyers. Of note is the appearance of newcomer World Insurance Associates who went from having four deals in 2016 to 9 in 2018, followed by 18 in 2019 and 42 in 2020.

Top BuyersNo. of Announced Deals in 2020
Acrisure108
Hub International64
Broadstreet Partners58
World Insurance Associates42
AssuredPartners38
PCF Insurance36
OneDigital29
Gallagher23
The Hilb Group22
Brown & Brown21
All Other333

Other top buyers continue to be familiar names in Massachusetts including Hub International, The Hilb Group, AssuredPartners, and Brown & Brown.

According to OPTIS Partners 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 continuing to drive the marketplace

It is no secret that private equity buyers continue to drive the increase in agency mergers and acquisition marketplace. OPTIS Partners calculates that PE buyers alone represent approximately 70% of the total deal volume. The rest is between privately held firms with 17% of the total transactions followed by publicly traded companies with 9%.

“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.

Property & Casualty sellers accounted for 397 of the total 774 transactions or a little more than half (51%) of the total amount.


How to access the full report

The OPTIS Partners report is based on its own proprietary database tracking which are the most active acquirers and other announced transactions. As such, while it is a reasonably accurate indication of deal activity in the sector, it is highly probable that the actual number of agency acquisitions was far greater than the total number reported. One simple reason for this result is that many buyers and sellers do not report transactions at all, while other acquirers omit reporting small transactions.

For those interested in accessing the latest OPTIS Partners Report, it can be viewed here.

For those who are looking for more information on the Massachusetts marketplace during 2020, please refer to our updated “Insurance Agency Mergers & Acquisitions In Massachusetts | 2020” listing.


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Filed Under: Insurance Agencies | Mergers & Acquisitions, Latest News Tagged With: Agency Checklists, Insurance Agency Acquisitions Massachusetts, insurance agency sales massachusetts, massachusetts insurance news, Massagent agency sales, New England Insurance News

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