M&A Activity Continues at a Snail’s Pace Compared to 2008
Insurance brokerage mergers and acquisitions in the second quarter of 2009 was nearly half of what is was during the second quarter of 2008. Just 39 transactions were announced from April through June compared to last year when 71 transactions were announced during the same time period. Lackluster M&A activity has been the theme during the first half of the year which is down 40 percent from last year with just 90 announced transactions.
Arthur J. Gallagher (AJG) is the most active acquirer year-to-date. AJG announced seven acquisitions or approximately 8 percent of all transactions. AJG’s largest acquisition in 2009 came with the purchase of the policy renewal rights from Liberty Mutual Insurance Co. and Wausau Signature Agency LLC with a total potential deal value of approximately $165 million. Three of the seven transactions were of agencies located in Texas. Four of the announcements came in the second quarter.
Hub International (Hub) is not far behind AJG with five acquisitions in 2009. Like AJG, Hub acquired renewal rights to Liberty Mutual’s middle market commercial P/C business. Four acquisitions occurred in the second quarter with two wholesale agency purchases in Canada and two retail agency purchases in Washington. Hub found itself on the other side of a transaction when it divested of non-core assets in Florida. Hub sold Hub International Florida to Hector Fortun, the former owner of the Florida-based brokerage that was purchased by Hub in 2006.
Another acquirer found itself divesting of a previously purchased asset when the executive team of Sovereign Benefits Consulting (SBC) purchased the assets from Sovereign Bank in June. SBC was formerly known as hartz consulting group llc when the bank purchased the agency in 2006. The rebranded agency is now called Banyan Consulting.
Brown & Brown (B&B) and Ascension Insurance are tied as the third most acquisitive broker with four deals each. The slower M&A pace is evident when looking at B&B’s acquisition activity this year versus last year when it had already 18 transactions through June.
Ascension Insurance has acquired eight brokerages with revenues of $75 million since its formation. Expanding its commercial and employee benefits capabilities on the West Coast and adding specializations in student health insurance, employee benefits for non-profit organizations and claims administration, Ascension acquired three California-based agencies in June.
Insurance brokerage deal volume in 2009 is on track to be the lowest in nine years. While activity picked up a tad in June, it doesn’t compare to the past two years. Third quarter activity, which is historically slower, won’t break any records, but it may follow the trend set at the end of the second quarter and pick up slightly.
Merger & Acquisition Activity: April – June 2009