OPTIS: Insurance Agency M&A Down 18% in Q1 2024

The first quarter of 2024 was the slowest for insurance agency mergers and acquisitions since the middle of the pandemic, according to investment banking and financial firm OPTIS Partners.

OPTIS Partners’ M&A database counted 155 announced insurance agency mergers and acquisitions in the first three months, down 18% from 188 during the first quarter 2023.

“On a trailing 12-month basis, we’re back to levels that we last witnessed at the end of 2020,” said Steve Germundson, a partner at OPTIS Partners.

The pullback of several traditional big buyers had an outsized impact over the last year as they integrate operations and reconsider strategies, added Tim Cunningham, managing partner. Past leaders such as Acrisure and PCF accounted for 47% of the overall decline in deal count of the last 12 months. Overall, there were 116 buyers in Q1 2024 compared to 148 during the same time last year.

BroadStreet Partners led buyers in the first quarter with 29 deals. Hub International was next with 12 deals, following by Inszone Insurance Services (10) and Keystone Agency Partners (8).

Cunningham said capital is available in the space but discipline has tightened, with buyers unwilling to chase deals. He said a “perceived depletion” of quality firms to buy is driving up the values of better firms.

“We don’t expect this to change any time soon,” he said.

Private-equity-backed buyers accounted for 71% of all transactions in Q1 2024.

In its wrap-up of 2023, OPTIS said the AON-NFP merger could lead to more large deals in 2024. In an April 19 filing with the U.S. Securities and Exchange Commission, AON said it and NFP expect the closing of their deal to be on or about April 25.