Deals for property & casualty and benefits brokers in US and Canada return to pre-pandemic levels in third quarter, OPTIS Partners reports
CHICAGO, IL / ACCESSWIRE / October 26, 2020 / There were 170 announced insurance agency mergers and acquisitions during the third quarter of 2020 compared to 173 for the same period in 2019, according to OPTIS Partners' M&A database. Deal activity was 31% higher than the 130 transactions in the second quarter, when the country was coming to grips with the pandemic.
For the first nine months of 2020, the total deal count was 466, off only 7% from 499 reported for the same period last year.
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.
"The small decline is entirely the result of the second quarter 2020 COVID slowdown," said Steve Germundson, partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. "Sans pandemic, 2020 would have been on track as a record-setting year. It's still possible that it will set an annual record."
"Nearly every active buyer from the past few years continues to drive their M&A strategy aggressively, and there are newly emerging buyers now showing up for the first time on the most-active buyer lists," Germundson said.
Report tracks activity by buyer and seller types
The report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
Sellers are classified as property & casualty brokers, property & casualty and employee benefits brokers, employee benefits brokers, and all others.
Acrisure continues to lead all buyers with 69 transactions in the first three quarters of the year, consistent with their same-period-totals in 2017 through 2019. Other top buyers were Broadstreet Partners with 40 deals (up from 26 in 2019), Hub International with 28 (37 for the same period in 2019) and Assured Partners with 19 (down from 31 in 2019). Newly emerging buyers considered "most active" include World Insurance Associates LLC with 23 transactions in 2020 (up from 14 in 2019) and PCF Insurance with 22 (up from 4).
Several other historically active buyers saw their transaction count drop substantially through nine months in 2020. Gallagher declined from 27 to 13, and Patriot Growth decreased from 23 to 11.
Private equity buyers dominate
The private equity-backed/hybrid group of buyers continues to dominate the volume of transactions at approximately 70% of the total. Acquisitions completed by privately held firms increased to 18% of the total while publicly traded firms continue to slip, currently at 9% of all deals.
P&C sellers accounted for 252 of the total 466 transactions (50%), consistent with their percentage of the totals in recent years.
"A faster pace of deals has clearly returned, and we expect it to continue given that the supply of both buyers and sellers remains very high, and the clarity of how to manage during pandemic times improves," said Tim Cunningham, Managing Partner at OPTIS. "The most significant threat going forward is an economic slowdown driven by a much more severe wave of the pandemic and/or failure of a meaningful funding plan for state and local government coming out of Washington."
The full report can be read at https://optisins.com/wp/2020/10/sept-2020-ma-report/.
OPTIS Partners has consistently been ranked in the top six most active agent-broker M&A advisory firms for 2014 - 2019 by S&P Global Market Intelligence.
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, [email protected], 312-235-0081
Dan Menzer, OPTIS Partners, [email protected], 630-520-0490
Steve Germundson, OPTIS Partners, [email protected], 612-758-0598
Henry Stimpson, Stimpson Communications, [email protected], 508-647-0705
SOURCE: OPTIS Partners