Insurance agency M&As reach second-highest total on record

At least 280 insurance agency mergers and acquisitions were announced during the first half of 2018, according to OPTIS Partners’ M&A database, making it the second-highest six month total. This year’s deals trailed off compared to the first half of 2017 when 333 transactions were reported.

The data covers U.S. and Canadian agencies selling primarily in the employee benefits, property-and-casualty insurance and those agencies that work in both employee benefit and P&C.

There were 135 deals reported in the second quarter of 2018, down slightly from the 147 reported for the second quarter of 2017. Daniel Menzer, partner at OPTIS Partners, says the reduction in deal count from the second quarter of the first half of 2017 is not indicative of a decline in overall M&A activity.

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“It is more just a reflection of the aberration we saw in deal activity in 2017,” Menzer says. “Many owners of vibrant and solid agencies are still looking for the right buyer, and at least as many active and aggressive buyers are ready to meet the demand.”

The report breaks down buyers into four groups: equity-backed or “hybrid” brokers, privately-held brokers, publicly-held brokers and those labeled all others.

Also see: From owner to employee: Preparing for life after the deal

For the first six-month period of 2018, Acrisure led all buyers with 41 transactions, followed by Hub International with 33, AssuredPartners with 19, Arthur J. Gallagher with 15 and Broadstreet Partners and Alera Group with 14 purchases each.

For the second quarter of 2018, Hub International led the transaction count with 20, followed by Acrisure at 13 and AssuredPartners, Gallagher and OneDigital all tied at nine transactions each.

Hybrid buyers were the lead buyer segment, completing more than 70% of the total transactions for the quarter and slightly more than two-thirds of the transactions through six-months of the year, totaling 188 transactions.

Acquisitions by privately owned agencies were the second most active groups, but were down both for the quarter — 18 in Q2-2018 versus 37 in Q2-2017 — as well as year-to-date — 55 in the first half of 2018 versus 82 in the first half of 2017.

Sellers working only in the employee benefits space accounted for 68 of the 280 sales made in the first half of 2018. Agencies offering both employee benefits and P&C accounted for 39 of the deals. The remaining sales were made with P&C agencies or those marked in the “other” category.

“We know not all transactions are publicized, so the actual number of agency sales certainly exceeds the 135 reported,” says Timothy Cunningham, managing partner at OPTIS Partners.

“However, because our data collections process is consistent from period to period and includes a variety of trade press information and M&A data from the buyer community,” he says, “we believe the deal activity measures over time are reflective of the overall M&A marketplace.”

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