Insurance Agency M&A Down Slightly but PE Activity Still Steady

Insurance Agency M&A Down Slightly but PE Activity Still Steady

optis nfThe number of mergers and acquisitions of insurance agencies fell slightly during the first half of 2013, with 122 reported transactions in the United States and Canada, versus 133 deals last year, according to OPTIS Partners’ semi-annual survey.

“It was a period of relative calm after the perfect storm of getting deals done before the capital gains tax-hike,” said Timothy Cunningham, managing director of OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. “This year’s numbers are inflated somewhat because many of the deals reported in January and some in February probably closed in 2012.”  Mr. Cunningham notes that 76 transactions were reported in the first quarter, but just 46 in the second quarter.

Privately owned brokers were the biggest buyers, making 45 acquisitions compared to 40 during the same period in 2012. Private-equity-backed brokers made 40 acquisitions, the same number as last year. Publicly owned brokers saw their deal count fall from 30 to 18, while banks made 14 acquisitions, up from 10.

Hub International alone accounted for 14 deals in the first half of the year. It was followed Arthur J. Gallagher (nine deals), and Digital insurance (seven).

On the seller side, sales of property-and-casualty-focused agencies stood at 46. There were 30 deals for agencies selling both P&C and employee benefits, 36 sales of employee benefits-only agencies, and 10 other transactions, primarily MGAs being sold.

“We don’t expect to see a comparable level of activity for the remainder of 2013 as we saw in 2012, but we also strongly believe that over the long-term, M&A activity will continue to grow,” said Mr. Cunningham. “There are plenty of buyers with readily available funds in the marketplace today. Buyers need the growth acquisitions provide, and the demand will continue to keep valuations attractive to sellers.”

The 19-page OPTIS Partners’ report, “Agent-Broker Mergers & Acquisitions June 2013” can be read online or downloaded by clicking HERE.

OPTIS is focused exclusively on the insurance distribution marketplace and offers merger & acquisition representation of buyers and sellers, including due-diligence reviews; appraisals of fair market value; financial performance review, including trend analysis and internal controls; ownership transition and perpetuation planning; quality control; E&O loss control; and process improvement. OPTIS Partners was ranked as the fifth most-active agent-broker M&A advisory firm in 2012 by SNL Financial. The firm has offices in Chicago and Minneapolis (

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-19-13

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