P/C Agency Mergers Rise 10% in First Half of 2021: OPTIS Partners
There were 339 announced property/casualty insurance agency mergers and acquisitions during the first half of 2021, up from 307 in 2020.
According to OPTIS Partners’ M&A report, it was the highest recorded total for the first half of the year. The OPTIS data covers U.S. and Canadian agencies selling primarily property/casualty insurance, agencies selling both property/casualty and employee benefits, and those selling only employee benefits.
“The combination of an increasing number of older agency owners facing a looming increase in capital-gains taxes and an ever-increasing number of buyers in the insurance agency space fueled the boom over the last six months,” said Steve Germundson, partner of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
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.
Acrisure led 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 reporting period.
Other top buyers were PCF Insurance with 22 deals (up from 13 in 2020), AssuredPartners with 21 (up from 19), BroadStreet Partners (19, down from 30) Hub International rounded out the top five buyers with 17 transactions in 2021 (down from 28).
Of the 10 most active buyers, four completed fewer deals in the first half of 2021 versus 2020: BroadStreet and Hub each declined by 11, Acrisure did eight fewer deals and The Hilb Group had one fewer. Relation Insurance, High Street Partners and Alera each more than doubled the number of transactions completed.
Private Equity Dominates
The private equity-backed/hybrid group of buyers did 66% of all first-half transactions, compared to 68% in the first half of 2020, while acquisitions by publicly traded brokers dropped from 10% to 5%. Privately held firms picked up gains as this group did 24% of the transactions in the first half of 2021, up from 17% in the same period last year.
“In some ways, the M&A story is familiar: more private equity-backed buyers with access to large amounts of cheap capital continue to fuel the pace of M&A and all-time high valuations,” said Dan Menzer, partner at OPTIS.
“An interesting development is the rise in privately-owned agency activity, accounting for a quarter of the deals done,” Menzer said.
Property/casualty sellers accounted for 188 of the total 339 transactions (55%), consistent with their percentage of the totals in recent years.
More to Come in 2021
“We expect the deal count to rise through the end of 2021 as more owners look to avoid tax increases, and we may see an increase in the number of large transactions as more buyers need larger deals to move the growth meter,” said Tim Cunningham, managing partner at OPTIS. “We also expect a continual increase in deals done between privately owned agencies of all sizes.”
- California Issues 1-Year Moratorium on Homeowner Insurance Cancellations And Non-Renewals
- Demand Outpacing Supply in One of Best E&S Markets in 50 Years, Industry Veteran Says
- Twitter Agrees to Pay $810M to Settle Shareholder Lawsuit Over Growth Prospects
- Aluminum Wrap Being Used to Protect Homes from California Wildfires