Insurance Agency Mergers and Acquisitions in First Half of 2018 Hit Second-Highest Total, OPTIS Partners Reports
Jul. 24, 2018
CHICAGO, IL / ACCESSWIRE / July 24, 2018 / There were 280 announced insurance agency mergers and acquisitions during the first half of the year, according to OPTIS Partners' M&A database. It was the second-highest six-month total, trailing only the first half of 2017 when 333 transactions were reported.
The data covers U.S. and Canadian agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and those selling only employee benefits.
There were 135 deals reported in the second quarter of 2018, down slightly from the 147 reported for the second quarter of 2017.
"The reduction in deal count from the second quarter and the first half of 2017 isn't truly indicative of a decline in overall M&A activity. It's more just a reflection of the aberration we saw in deal activity in 2017," said Daniel P. Menzer of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. "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."
Tax reform that lowered corporate income tax rates and established certain limits on interest expense deductions has not seemed to have any material influence on buyer appetites, he said.
The OPTIS Partners report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
For the six-month period, Acrisure led all buyers with 41 transactions, followed by Hub International Limited (33), AssuredPartners (19), Arthur J. Gallagher (15) and Broadstreet Partners and Alera Group (14 each). For the quarter, Hub International Limited led the transaction count with 20, followed by Acrisure (13), and Assured Partners, Gallagher, and OneDigital all tied at 9 transactions each.
PE/hybrid buyers were the lead buyer segment, completing more than 70 percent of the total transactions for the quarter (97 in Q2-2018 vs. 88 in Q2-2017) and slightly more than two-thirds of the transactions through six-months of the year (188 in total). Acquisitions by privately owned agencies were the next most active group but were down both for the quarter (18 in Q2-2018 vs. 37 in Q2-2017) as well as year-to-date (55 in the first half of 2018 vs. 82 in the first half of 2017).
Sellers for the first half of the year by type of agency were P&C (150 announced transactions), employee benefits agencies (68 sales), P&C/benefits brokers (39 deals), and all others (23 transactions).
"We know not all transactions are publicized, so the actual number of agency sales certainly exceeded the 135 reported," said Timothy J. Cunningham, managing partner with OPTIS Partners. "However, because our data collection process is consistent from period to period and includes a variety of trade press information and M&A data from the buyer community, we believe the deal activity measures over time are reflective of the overall M&A marketplace."
The full report can be read at http://optisins.com/wp/2018/07/june-2018-ma-report/.
OPTIS Partners was ranked in the top five most active agent-broker M&A advisory firms for 2014 - 2018 by SNL Financial.
Focused exclusively on the insurance-distribution marketplace, Chicago-based OPTIS Partners ( www.optisins.com ) offers merger & acquisition representation for buyers and sellers, including due-diligence reviews. It provides appraisals of fair market value; financial performance review, including trend analysis and internal controls; and ownership transition and perpetuation planning.
Tim Cunningham, OPTIS Partners, , 312-235-0081
Dan Menzer, OPTIS Partners, , 630-520-0490
Henry Stimpson, Stimpson Communications, 508-647-0705
SOURCE: OPTIS Partners