Mergers and acquisitions of insurance agencies hit an all-time high in 2012, with 291 reported transactions in the United States and Canada, according to a new report from OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry, titled “Agent-Broker Mergers & Acquisitions 2012”. The previous record for insurance agency transactions was 284 in 2008. A link to a free copy of this report is available at the end of this article.
“Buyers were anxious to acquire and sellers equally anxious to complete their deals before capital gains tax rates went up in 2013,” said Timothy Cunningham, managing director of OPTIS.
Focused exclusively on the insurance distribution marketplace, OPTIS offers merger & acquisition representation of buyers and sellers, including due-diligence reviews; appraisals of fair market value; financial performance review, including trends and internal controls; ownership transition and perpetuation planning; quality control; E&O loss control; and process improvement. The firm has offices in Chicago and Minneapolis (www.optisins.com).
Privately owned agencies were still the biggest buyers, making 93 acquisitions compared to 101 in 2011. Banks bought 24 agencies, down from 37 in 2011. “This decline is perhaps due to greater competition for deals from publicly owned brokers and private equity firms, which together accounted for 53 percent of the deals compared to 45 percent in 2011,” said Mr. Cunningham.
The top three buyers last year were publicly owned broker Arthur J. Gallagher (30 deals), private-equity-backed firm Hub International (21) and private-equity-backed firm Confie Seguros (18).
On the seller side, sales of property-and-casualty-focused agencies continued to rise, reaching 109, and deals for agencies selling both P&C and employee benefits also rose, to 78. Sales of employee benefits agencies fell slightly, to 66. “Given the uncertainty about how Obamacare will affect the revenues of employee benefits firms and the complexity of implementing federal and state legislation, it’s a bit surprising to see the sales of employee benefits firms being so strong,” said Mr. Cunningham.
The full report, “Agent-Broker Mergers & Acquisitions 2012,” can be read online by clicking HERE.
© 2013 PEPD • Private Equity’s Leading News Magazine • 3-1-13
