P&C Deals rise 13% as of Q3-2021 – the highest ever for the first nine months, says OPTIS Partners
The year 2021 is turning into a record-breaking year for insurance agency mergers and acquisitions. According to the latest data from OPTIS Partners, the nine months of 2021 recorded a total of 553 announced acquisitions – the highest total of insurance agency mergers and acquisitions for this period of time. In comparison, there were a total of 490 agency mergers and acquisitions for the first ninth months of 2020.
“Multiple factors that drive deal activity continue unabated. An aging group of owners looking at all-time high valuations and expecting future tax increases is met by a larger group of buyers needing to fuel inorganic growth,” said Steve Germundson, partner of OPTIS Partners,
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
Private equity-backed/hybrid group dominate the buyers group
Private equity money continues to dominate the majority of insurance agency mergers & acquisitions in 2021 funding approximately 70% of all transactions thus far this year. While comparable to past years, in contrast publicly-traded brokers representation in the total number of deals this group financed decreased by four percentage points from 10% to 6% of total transactions. In addition, this group’s deal count also fell 32% year-over-year.
As for P&C sellers, OPTIS Partners estimates that they accounted for 313 of the 553 reported transactions or 57% of all transactions.
Acrisure continues to outstrip all other national acquirers
As has been the case for all of 2021 and now leading with 79 transactions so far this year, Acrisure had far and away more deals than any other insurance agency buyer in the U.S. .
Other major buyers worth noting include include PCF Insurance and Broadstreet, each with 31 deals (up from 22 and 40 in 2020), World Insurance Associates with 27 (up from 22) and Hub International with 25 (down from 40).
Optis Partners also notes that of the 10 most active buyers, only three completed fewer deals through Q3-2021 versus 2020: Hub declined by 15, BroadStreet had nine fewer deals, and AssuredPartners dropped by three. Relation Insurance, High Street Partners, and Alera, however, each more than doubled the number of transactions completed.
Active acquires with 20 or More Deals pas 12 months
|World Insurance Associates||5||9||18||42||47|
|The Hilb Group||14||12||25||22||27|
|High Street Partners||0||1||3||9||26|
Optis Partners’ quarterly prediction: ‘Hot pace expected to continue’
“The fourth quarter of 2021 may not reach the massive volume of deals done in the last quarter of 2020, but it will likely be close. A number of active buyers have told us one of their biggest challenges is lining up legal and due-diligence providers for the remainder of the year,” said Dan Menzer, partner at OPTIS.
“There is nothing on the horizon that indicates a material slowing of deal activity, absent true economic disruption, even if we see a modest increase in capital gains taxes and rise in interest rates,” said Tim Cunningham, managing partner. ”During the biggest economic disruption since 2008, OPTIS has handled more deals than ever. There’s just so much capital continuing to look for sound investments.”
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. Access the report by click the image below:
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 | Q2-2021” listing here.