Deals for property & casualty and benefits brokers in United States and Canada dip 20% in first half, OPTIS Partners reports
Insurance agency mergers and acquisitions dropped by 20% during the first half of 2024, according to OPTIS Partners’ latest quarterly report. According to the company’s database, there were 300 announced insurance agency mergers and acquisitions in the first half of 2024, down from 385 in the same period in 2023.
As for the second quarter of 2024, there were 146 deals announced nationally in Q2-2024, down from the 154 announced in the previous quarter. Year-over-year, this number is a 26% decrease as compared to Q2-2023.
“The current rate of deal-making is like that of 2019 and 2020,” said Steve Germundson, a partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
It was the lowest first-half total in four years and 26% below the previous five-year first-half average. For six consecutive quarters, the deal count has fallen below the long-term trend line.
OPTIS managing partner Timothy J. Cunningham added, “While some formerly very active buyers became relatively inactive, it appears that a few are picking up the pace slightly. Others that didn’t slow down in the recent economic downturn indeed have increased their buying pace.”
BroadStreet Leads Buyers
Among buyers, BroadStreet Partners recorded the most transactions in the first half of 2024 with 46, 77% higher than in the same period last year. Inszone and Hub followed with 27 and 26 deals, respectively. While Hub’s pace of deal-making is similar to prior years, Inszone’s pace has increased each year since 2021.
The top 13 buyers (top 10 and ties) accounted for 193 deals or 64% of the total. All were private equity-backed firms except Leavitt Group (private) and Arthur J. Gallagher (publicly traded).
There were 62 unique buyers of insurance-distribution-related businesses through the first half of 2024, 41 of which did fewer than five transactions and 26 of which did just one. Some 14 of these firms announced their first acquisition.
The report breaks down American and Canadian buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others. The private equity-backed/hybrid group of buyers maintained their dominance in the buying spree with 71% of all transactions for the half, while transactions between private parties accounted for 20%. Publicly held brokers and all others accounted for just 7% of deals.
Top 10 Acquirers (including ties) YTD in 2024
| Buyer | 2019 | 2020 | 2021 | 2022 | 2023 | H1-2024 |
|---|---|---|---|---|---|---|
| BroadStreet Partners | 34 | 58 | 45 | 35 | 59 | 46 |
| Inszone Insurance Services | 6 | 10 | 12 | 42 | 45 | 27 |
| Hub International | 52 | 65 | 62 | 70 | 65 | 26 |
| Keystone Agency Partners | 0 | 7 | 22 | 29 | 29 | 14 |
| Leavitt Group | 10 | 12 | 24 | 20 | 34 | 13 |
| Gallagher | 34 | 23 | 25 | 26 | 36 | 13 |
| One Digital | 17 | 32 | 21 | 21 | 19 | 9 |
| ALKEME | 0 | 0 | 7 | 11 | 12 | 9 |
| PCF Insurance | 4 | 36 | 99 | 71 | 2 | 8 |
| Acrisure | 98 | 108 | 122 | 107 | 36 | 7 |
| Risk Strategies Company | 22 | 18 | 24 | 24 | 29 | 7 |
| Alliant Insurance Services | 7 | 6 | 22 | 10 | 18 | 7 |
| Higginbotham & Assoc | 5 | 9 | 6 | 13 | 9 | 7 |
| Sub-total | 289 | 384 | 491 | 479 | 393 | 193 |
| All Others | 369 | 421 | 617 | 552 | 431 | 107 |
| Totals for Year | 658 | 805 | 1,108 | 1,031 | 824 | 300 |
Significant Broker Transactions in 2023
Another interesting tidbit from the report highlights the three largest broker transactions in 2023. They are as follows:
| Seller | Buyer | Estimate 2021 Revenue | Date |
|---|---|---|---|
| NFP Corporation (New York, NY) | AON | $2 billion | April 2024 |
| Truist Insurance Holdings (Charlotte, NC) | Stone Point Capital/ Clayton Dubilier & Rice/ Others | $3.4 billion | May 2024 |
| Fisher Brown Bottrell (Jackson, MS) | Marsh McLennan Agency | $58 million | June 2024 |
P&C Agencies Dominate Sellers
The report covers four types of sellers: agencies property-and-casualty insurance agencies, agencies offering both P&C and employee benefits, employee benefits agencies, and all other sellers (life/financial services, consulting and other businesses associated with insurance distribution).
P&C sellers accounted for 198 transactions (66% of the total). Benefits agencies sales totaled 34 (11%), and there were 33 sales of P&C/benefits agencies (11%). All other sellers accounted for 35 sales (12%).
Will M&A decline go deeper?
“We could be only at the beginning of a longer slide, but it seems unlikely,” Germundson said. “A plethora of buyers is still looking to invest capital, and there are still a robust number of independent agencies unable to internally perpetuate their ownership. So we could likely be approaching a ‘normal’ level of deal-making, similar to what we saw around 2017-2019.
“If inflation declines and the Fed posts rate cuts between now and the end of the year, buyers may become more active. This market is still supply-side driven.”
Cunningham added: “It’s quite interesting that there are several brokers openly discussing their intentions on going public in 2024 or 2025, something that hasn’t been a factor, other than Baldwin Risk, in many years. The market is always evolving.”
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 above image or by clicking this link: First Half 2024 Merger & Acquisition Update » Optis Partners (optisins.com).
