Deals for property & casualty and benefits brokers in US and Canada set steady pace while reverting to pre-boom levels, OPTIS Partners reports
Slow and steady seems to be the sum up phrase for insurance agency mergers and acquisition activity in 2023. Overall, there were 782 announced insurance agency mergers and acquisitions in 2023, down 24% from 1,031 reported in 2022, according to OPTIS Partners. In particular, the report noted that, unlike in other years, there was no “mad dash” to the finish line at the end of the year, when approximately 10% of a year’s deals are done.
“The second half of the year is usually busier than the first half, but 2023 is a story of consistent levels of deal activity throughout the year,” said Steve Germundson, partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
Some active buyers pulled back dramatically while many others pulled back slightly. They wanted to focus on integrating agencies they acquired during the buying spree or to digest substantial amounts of debt, or both, the firm said.
Deals in the second half of 2023 were up 4% over the first half of 2023 but down 27% over the second half of 2022. The 204 deals during the fourth quarter of 2023 were nearly the same as the third quarter at 202, yet 32% lower than over the same period in 2022.
Two Firms Accounted For The Nearly 60% Decline in Activity in 2023
“Transactions in 2023 represent a return to the industry’s deal pace experience before the 25-month-long wave of deals that started in December 2019,” Germundson said. “When compared to the three years prior to that time, the deal count is actually up 11%, which is notable because the pool of sellers shrank by over 2,300 firms since December 2019.”
While several historically active buyers slowed their pace down by more than 10% in a year-over-year comparison, the two perennial deal-count leaders (Acrisure and PCF) accounted for nearly 60% of the total decline in 2023.
“The M&A market has returned to normal, and the number of potential buyers continues to be robust,” said Tim Cunningham, managing partner of OPTIS Partners. “Valuations should continue to hold solid, and for the better firms, we may see a slight increase continuing. The mega-deal between AON and NFP is slated to close sometime in 2024, and we think more large deals may be done this year.”
OPTIS Partners tracks buyers by four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
Sellers are classified as U.S. and Canadian property/casualty and employee benefits brokerages, third-party administrators and related managing general agent operations. Sellers also include agencies solely focused on life insurance, investment or financial management, consulting and other businesses connected to insurance distribution.
Hub and Broadstreet led buyers in 2023
Hub International continued to lead all buyers with 65 transactions in 2023, down 7% over its 2022 totals, yet 6% higher than its previous five-year average.
Broadstreet Partners followed with 59 completed transactions (up from 35 in 2022). Other top buyers included Inszone Insurance Services with 46 acquisitions (up from 42 in 2022) and three firms with 36 transactions (Acrisure, Arthur J. Gallagher, and World Insurance Associates).
Thirteen firms did 20 or more deals in 2023 compared to 17 in 2022. Out of these 13, only five did more deals than in the prior year. Broadstreet Partners and World Insurance Associates picked up the pace the most with year-over-year increases of 24 and 14 deals, respectively.
Private-equity buyers dominate
While private-equity-backed buyers have led the charge in deal activity, that slowed down a bit in 2023 as this group represented 69% of the completed deals, down from the 12-month high-water mark of 77% in the first quarter of 2022. Nevertheless, transactions led by privately owned firms hit an all-time high in 2023 at over 21% of the total.
The most active privately owned buyers in 2023 were Leavitt Group at 34 transactions (up from 20), TrueNorth Companies at 13 (up from 10), Heffernan Insurance Brokers at 11 (up from 8), Westland Insurance Group at 15 (up from 9), and TrueNorth Companies at 10 (up from 4).
Arthur J. Gallagher was the only publicly traded broker that did more than six deals in the U.S. and Canada with 36 in 2023, up from 26 in 2022.
Privately Owned Top Buyers Since 2019
Of interest to our readers, may be the following chart from the 2023 report highlighting the top Privately Owned Agency Buyers in the US since 2019:
| Top Privately Owned Buyers Since 2019 | 2019 | 2020 | 2021 | 2022 | 2023 | 5 Year Totals |
|---|---|---|---|---|---|---|
| 1 Leavitt Group | 10 | 12 | 24 | 20 | 34 | 100 |
| 2 TrueNorth Cos | 4 | 10 | 4 | 10 | 13 | 41 |
| 3 Heffernan Insurance Brokers | 2 | 8 | 11 | 8 | 11 | 40 |
| T4 IMA Financial Group | 7 | 8 | 5 | 8 | 28 | |
| T4 Westland Insurance Group | 2 | 10 | 9 | 15 | 8 | 44 |
| 6 Cross Insurance | 12 | 9 | 7 | 10 | 7 | 45 |
| T7 Duffy Insurance Agency | 1 | 3 | 1 | 4 | 9 | |
| T7 Sunstar Insurance | 1 | 3 | 6 | 4 | 14 | |
| T7 Kaplansky Insurance | 1 | 1 | 4 | 4 | 4 | 14 |
| T7 Liberty Company Insurance Brokers | 2 | 2 | 10 | 33 | 4 | 51 |
| T7 Ryan Specialty Group | 6 | 1 | 2 | 2 | 4 | 15 |
| Active Buyers | 33 | 61 | 83 | 112 | 97 | 401 |
| All Others | 81 | 57 | 57 | 43 | 67 | 305 |
| Total Transactions | 114 | 118 | 140 | 155 | 164 | 691 |
P&C sellers equal 60% of deals
P&C sellers accounted for 472 of the total 782 transactions (60%), while 103 employee benefits specialists were sold (13%), both similar to their share of the totals in recent years.
How to Access the Latest Report
The OPTIS Partners report is based on its own proprietary database tracking which are the most active acquirers and other announced transactions. So, 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 to the full report is available by clicking the image below:
