Post Spitzer, merger activity picking up

Last year wasn’t the busiest year for mergers and acquisitions, but as concerns over various probes of the insurance industry fade, activity is picking up, according to Kevin Donoghue, of Mystic Capital Advisors Group, a mergers and acquisitions specialist.

“It’s been a pretty exciting time period to be in the mergers and acquisitions field,” said Donoghue in an exclusive Insurance Journal interview broadcast on https://www.insurancejournal.com/broadcasts/player/?vid=1509.

Donoghue thinks the industry probes spearheaded by New York Attorney General Eliot Spitzer had a dampening effect on mergers but that era is passing.

Certain players continue to be driving forces in mergers and acquisitions. “It’s still being driven by growth expectations of the publicly traded brokers. Without acquisitions, most of them aren’t even growing organically,” the Mystic Capital executive explains. “They’re still very active in the marketplace, so there’s that supply/demand imbalance with them as well.”

He says some banks are still interested in buying insurance operations.

“Banks’ interest has ebbed and flowed over the past few years,” Donoghue said during the interview conducted at the recent Target Markets Program Administrators Association meeting in Baltimore.

“I think the consolidation in the banking industry itself has created opportunities for new bank parent companies to divest opportunities. There still are a number of banks that are interested in buying as well, so different bank holding companies have different opinions on the insurance platform.”

It’s a good time for sellers who have reasonable expectations of prices. “There’s not a shortage of buyers in the industry, so certainly if there’s an interested seller, it’s a good time from a supply/demand perspective. There’s always that effect, do buyers have reasonable pricing expectations? That’s really what keeps deals from happening versus anything,” he concluded.

Topics Trends Mergers & Acquisitions