OPTIS Partners latest report sees deals for Property & Casualty as well as Benefit Brokers in both the U.S. and Canada down 15%
Recorded mergers and acquisitions involving insurance agencies across the nation were down 15% in the First Quarter of 2021 (Q1-2021) as compared to recorded deals during the same time period in 2020. Approximately 150 insurance agency deals officially closed during Q1-2021 as opposed to 176 during the First Quarter of 2020.
According to the latest quarterly report from Chicago-based OPTIS Partners, Q1-2021 was the lowest first-quarter total recorded since 2016. While activity will likely rise a bit more during 2021, OPTIS Partners cautions, however, that levels may not reach near those of 2020.
“Following a record-breaking 2020, we suspect buyers took a breather to integrate acquired businesses,” said Timothy J. Cunningham, managing partner of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry, adding that “An increase in taxes is more likely in 2022, and thus a second wave of sellers should emerge in second half of 2021, fueling another robust year of M&A transactions.”
Another reason the quarter reported cited for the downturn in M&A rates was the “reaction to the race” that occurred at the end of 2020 when many buyers and sellers rushed to close their sales in order to avoid the tax increases expected in 2021.
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
Sellers are categorized as follows:
- property & casualty brokers,
- property & casualty and employee benefits brokers,
- employee benefits brokers, and
- all others
Broadstreet & Acrisure were the most active buyers this quarter
While many of the most active buyers of the past few years continued to acquire additional agencies, all of the top 10 most active buyers closed fewer deals in Q1-2021 as compared to their number of acquisitions completed in prior years. As for who is the most active buyer of 2021, Broadstreet Partners, an entity back by the Ontario Teachers’ Pension Fund, is the leader with 12 completed acquisitions during Q1-2021. While a substantial number, it is four less than the 16 it acquired during the same time period last year.
|TOP BUYERS||Deals Announced in Q1-2021||Deals Announced in Q1-2020|
|World Insurance Associates||5||4|
|Westland Insurance Group||5||1|
As has been the case in previous quarters and years, private equity-backed/hybrid group of buyers were the driving force in acquisitions representing the buyer in 61% of all recorded deals in Q1-2021. The remaining 30% were transactions conducted between private parties.
As for the breakdown in types of agencies acquired, P&C sellers accounted for 91 transactions (61% of the total), while benefits agencies sales totalled 25 (17%). Finally the remaining 10% of sales involved the sale of 15 P&C/benefits agencies.
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 Q1-2021, please refer to our updated “Insurance Agency Mergers & Acquisitions In Massachusetts | 2021” listing here.