2022 M&A Activity Falls, But Still Could Rank as Second Highest On Record: Report

Berkshire Hathaway’s $11.6 billion acquisition of Alleghany Corp. was the largest insurance transaction in 2022 but insurance M&A activity dropped overall this year, according to an S&P Global Market Intelligence analysis.

As of the end of November, there were 685 deals involving insurance brokers and 105 among insurance underwriters, S&P Global Market Intelligence reported. In 2021 those totals were 1,150 and 184, respectively.

An analysis by insurance agency consulting firm Marshberry said the amount of mergers and acquisitions in the insurance industry dropped by more than 200 in 2022 but when all is said and done, the year could still be the second highest on record, following the record year in 2021. There were 708 M&A deals in 2002, down from 924 in 2021, according to Marshberry.

“When the dust settles and all deals are announced, it will likely be the second highest year on record behind 2021, eclipsing the 2020 total of 712 announced transactions” even with record inflation, a slowing economy, labor shortages, and the Federal Reserve raising interest, Marshberry said.

S&P said the number of deals in the property and casualty, multiline sector, as well as the aggregate transaction value, fell sharply in 2022. A total number of 61 deals were announced in 2022 with an aggregate transaction value of $1.2 billion. In 2021, 81 deals were announced with an aggregate transaction value totaling $12.8 billion.

Eleven of the 15 largest insurance deals of 2022 were announced during the first half of the year and eight of the deals targeted insurance brokers.

The second largest insurance deal of 2022 was Brown & Brown Inc.’s acquisition of Global Risk Partners Ltd. The $1.8 billion deal was finalized in July and since being acquired, Global Risk Partners has made acquisitions of its own, purchasing UK-based commercial insurance broker CC Flint and Co. The terms of the acquisition were not disclosed.

One of the largest insurance transactions announced in 2022’s second quarter was White Mountains Insurance Group Ltd.’s deal to sell NSM Insurance Group LLC to The Carlyle Group Inc. in a transaction valued at about $1.8 billion. Disclosed in May, the deal closed in August.

According to Marshberry, more than 74% (525) of deals in 2022 were backed by private capital buyers. Independent agencies accounted for 83 M&A transactions.

Marshberry said the top 10 most active buyers accounted for 345 of the 708 transactions (48.7%), while the top three — Acrisure, Hub International Limited, and Peter C. Foy & Associates Insurance Services — accounted for 19.8% of total transactions last year.

Marshberry added that valuations in the insurance distribution sector for 2022 were “still very strong” and, looking ahead, the firm said there are “lots of firms looking to invest in this space and valuations continue to remain high, despite a leveling playing field and rising cost of debt.”