P/C Agency Mergers Increase By 10% in the First Half of 2021: OPTIS Partners

During the first half of 2021, 339 non-life insurance agency mergers and acquisitions were announced, compared to 307 in 2020.

Source: UK Times | Published on July 9, 2021

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According to the M&A report of OPTIS Partners, this is the highest total recorded for the first half of the year.

OPTIS data covers agencies in the United States and Canada primarily selling P&C insurance, agencies selling both fringe benefits and benefits, and those selling only fringe benefits.

“The combination of a growing number of older agency owners facing an impending increase in capital gains taxes and an ever-growing number of buyers in the insurance agency industry has fueled the boom in the country. over the past six months, ”said Steve Germundson, OPTIS partner. Partners, an investment bank and a financial consulting firm specializing in the insurance sector.

Activity by type of buyers and sellers

The report divides buyers into four groups: Private / Hybrid Funded Brokers, Private Brokers, Public Brokers, and everyone else.

Acrisure leads all buyers with 31 transactions in the first half of 2021, far more than any other buyer, but 21% below their five-year average for this benchmark period. The other main buyers were PCF Insurance with 22 transactions (compared to 13 in 2020), AssuredPartners with 21 (compared to 19), BroadStreet Partners (19 compared to 30) Hub International completed the Top 5 with 17 transactions in 2021 (compared to 28).

Of the 10 most active buyers, four closed fewer deals in the first half of 2021 compared to 2020: BroadStreet and Hub each declined by 11; Acrisure closed 8 fewer deals, The Hilb Group had one less Relation Insurance, High Street Partners and Alera each more than doubled the number of deals closed.

Private equity dominates

The private equity / hybrid buying group completed 66% of all deals in the first half of the year, up from 68% in the first half of 2020, while acquisitions by listed brokers fell from 10% to 5% . Private companies saw gains, as this group completed 24% of transactions in the first half of 2021, up from 17% in the same period last year.

“In some ways, the history of mergers and acquisitions is a familiar one: more and more private equity buyers with access to large amounts of cheap capital continue to fuel the pace of mergers and acquisitions and valuations. record. An interesting development is the increase in the activity of private agencies, accounting for a quarter of concluded deals, ”said Dan Menzer, partner at OPTIS.

Property sellers accounted for 188 of the 339 total transactions (55%), which is their percentage of totals in recent years.

More to come in 2021

“We expect the number of transactions to increase through the end of 2021 as more homeowners seek to avoid tax increases, and we may see an increase in the number of large transactions as more buyers need bigger deals to move the growth meter, ”said Tim Cunningham. , Managing partner. “We also expect a continued increase in transactions between private agencies of all sizes.”