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Deals for property & casualty and benefits brokers in US and Canada reverted to pre-boom levels while three mega-deals made news, OPTIS Partners reports
U.S. insurance agency mergers and acquisitions experienced a noticeable decrease in 2024, according to the latest quarterly report from OPTIS Partners. A total of 750 transactions were announced during the year, reflecting a 10% reduction from the 833 deals reported in 2023. This downturn represents a significant shift in market dynamics compared to the more vigorous activity of the previous year.
“There is a general pullback in the pace of acquisition for more than half of the historically most-active buyers, yet firms like Broadstreet Partners and ALKEME continue to pick up their pace, and others like PCF and Relation are moving again after brief slowdowns,” said Steve Germundson, partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
Source OPTIS Partners
Biannual Comparison Reveals Mixed Trends:
The analysis highlighted that although there was a 21% uptick in M&A activity in the second half of 2024 compared to the first half, it was still 8% lower than the latter half of 2023. The fourth quarter specifically saw 199 deals, marking a 6% decline from the third quarter and a more pronounced 16% decrease compared to the fourth quarter of 2023.
Key Transactions and Active Buyers:
The market’s landscape was shaped by notable acquisitions and the varying pace of purchases among leading firms. As Mr. Germundson pointed out above while there was a general slowdown, firms like Broadstreet Partners and ALKEME bucked the trend by intensifying their acquisition efforts.
In addition, there were three ‘giant’ transactions announced during last year. These high-profile transactions included AON’s purchase of NFP for $13 billion in April, Marsh McLennan Agencies’ acquisition of McGriff Insurance Services for $7.75 billion in November, and Arthur J. Gallagher’s agreement to acquire AssuredPartners for $13.45 billion, expected to finalize in early 2025.
Diverse Buyer Profiles and Strategies:
The report categorizes buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and others. Private equity-backed buyers dominated the scene, orchestrating 72% of the year’s transactions, which aligns with their historical activity range of 69%-75%. Privately owned firms, however, saw a decline in their share of transactions, dropping from over 22% in 2023 to 17% in 2024.
Leading Buyers and Sector Growth:
The insurance M&A landscape in 2024 saw a notable decrease in the diversity of active buyers. The number of unique buyers dropped to 98, which represents a 20% decline from the 122 reported in 2023, and an even steeper 45% fall from the peak of 177 buyers in 2017. Over this period, the composition of buyers shifted, with the number of private equity-backed buyers that reported at least one deal growing from 30 in 2017 to 40 in 2024.
Broadstreet Partners emerged as the most prolific buyer in 2024, executing 90 transactions. This marked a 53% increase over the previous year and nearly double its average pace over the past five years. Hub International completed 61 transactions, a slight decrease from 66 in 2023, while Inszone Insurance Services reported an increase to 48 deals, up from 46.
Other significant contributors to the transaction volume included Patriot Growth Insurance Services, which completed 35 deals, down slightly from 36 in 2023. Arthur J. Gallagher maintained a consistent pace with 31 acquisitions, matching its 2023 figure. Leavitt Group also saw a slight decrease, completing 30 transactions compared to 34 in the previous year.
The analysis showed that eleven firms completed 20 or more transactions in 2024, a decrease from 13 in 2023 and 17 in 2022. Of these, only four firms managed to exceed their deal counts from the previous year. In addition to Broadstreet Partners, ALKEME increased its deal activity significantly, with an increase of 11 transactions year-over-year. Conversely, World Insurance Associates and Acrisure saw the most substantial declines in their transaction volumes, dropping by 20 and 12 deals, respectively.
Market Outlook and Valuations:
Despite the slowdown, the sector’s outlook remains cautiously optimistic, with OPTIS Partners noting that buyers continue to pay top dollar for good agencies.
“The M&A market is in a fairly steady state regarding both the number of transactions in the year and the pace of them throughout the year. This is the second consecutive year in which there was no mad dash to closing a large number of deals at year-end,” said Tim Cunningham, managing partner of OPTIS Partners.
“We think there could be some more large deals in the next 12-24 months, though likely not of the magnitude of these three. Nonetheless, the chase for scale continues, and this should buoy seller valuations, especially for the better firms, absent a major change in the underlying economy or the insurance marketplace,” he said.
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: 2024 Year-End Merger & Acquisition Report » Optis Partners (optisins.com).
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