Deals for property & casualty and benefits brokers in US and Canada dip 17% in first quarter, OPTIS Partners reports
CHICAGO, IL / ACCESSWIRE / April 19, 2023 / There were 158 announced insurance agency mergers and acquisitions in the first quarter of 2023, down 17% from 190 in the first quarter of 2022, according to OPTIS Partners' M&A database.
It was the lowest first-quarter total since 2019 and 7% below the 5-year average.
"Considering the sharp rise in interest rates and economic uncertainty, it is no surprise that first-quarter activity was lower than last year's," said Steve Germundson, a partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
"Whether by choice or by necessity, some buyers are standing on the sidelines for the time being. But other well-capitalized firms are still very much in the hunt for M&A," said OPTIS managing partner Timothy J. Cunningham.
Acrisure, Inszone and Hub lead buyers
Among buyers, BroadStreet Partners recorded the most transactions in Q1 '23 with 14 deals, followed by Inszone Insurance Services and Hub International with 10 deals each, World Insurance Associates with 9, and Risk Strategies Company with 8 deals.
BroadStreet, World, and Risk Strategies all completed more than two times the number of transactions than in Q1 2022. Other top buyers were Keystone Agency Partners and Arthur J. Gallagher (7 deals each), Choice Financial Group and Acrisure (6 deals each). NFP rounded out the top 10 with 5 transactions.
Some buyers that have been very active over the last five years slowed or shut off activity--including, most notably, PCF, Acrisure, HighStreet Partners, and OneDigital.
Private equity buyers prevail
The private equity-backed/hybrid group of buyers maintained their dominance in the buying spree with 74% of all transactions for the quarter, while transactions between private parties accounted for 17%.
P&C Agencies dominate sellers
Property & casualty sellers accounted for 87 transactions (55% of the total). Benefits agencies sales totaled 13 (8%), and there were 34 sales of P&C/benefits agencies (22%). All other sellers accounted for 24 sales (15%).
Even though the deal count is lower both compared to Q4 '22 and Q1 '22, the comparison to 3- and 5-year historical averages is not as dramatic.
"We're experiencing the other side of a nine-quarter deal bubble that began in Q4 '20. The current deal environment may have wavered some with economic changes and looks anemic compared to the bubble years, but there is plenty of evidence to suggest that M&A in the insurance distribution sector will continue at a healthy pace," Germundson said.
Report tracks activity by buyer and seller types
OPTIS Partners tracks buyers by four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
Sellers are placed in four categories: property/casualty agencies, employee benefits agencies, combination P&C/benefits agencies and all others. The latter includes third-party administrators and related managing general agent operations, and agencies solely focused on life insurance, investment or financial management, consulting and other businesses connected to insurance distribution.
Quarterly reports cover buyers and sellers in the United States and Canada.
The full report can be read at https://optisins.com/wp/2023/04/q1-2023-ma-report/.
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.
Contact: Steve Germundson, OPTIS Partners, germundson@optisins.com 612-758-0598
Tim Cunningham, OPTIS Partners, cunningham@optisins.com, 312-235-0081
Dan Menzer, OPTIS Partners, menzer@optisins.com, 630-520-0490
Henry Stimpson, Stimpson Communications, 508-647-0705 Henry@StimpsonCommunications.com
SOURCE: Stimpson Communications
View source version on accesswire.com:https://www.accesswire.com/750047/Insurance-Agency-Mergers-and-Acquisitions-Drop-in-Q1
