Deal Activity Still Impressive

Deal count for the second quarter of 2015 was one of the most active quarters on record with 87 announced transactions. The total deal count for year-to-date 2015 (as of July 6, 2015) was at 187 (U.S. based transactions). This was a 21.4 percent increase over the number of transactions over the same period in 2014 and the highest deal count in the first half of the year in the past 10 years.

For the second quarter of 2015, 27 deals closed in April, 29 in May and 31 in June.

For the first six months of 2015, 55 percent of all acquired agencies were property/casualty firms, 29 percent were multiline agencies and 16 percent were employee benefits firms. The wholesale segment, which comprised of 21 percent of the total deal count with 40 deals, is on pace to increase by more than 25 percent by the end of 2015.

Private-equity backed and independent agencies completed 132 transactions, accounting for 71 percent of total deal activity in the first half of 2015. Year-to-date ending June 30, the deal count for public brokers declined from 28 closed transactions in 2014 to 17 in 2015, and 9 percent of the deal activity in the first half of 2015. Insurance companies, banks and other buyers experienced a surge activity from 21 closed transactions in 2014 to 38 in 2015, and accounted for the remaining 20 percent of deal activity.

Top Buyers

The top five buyers for the year represented 28 percent of total deal activity for the first half of 2015 and the top 10 accounted for 40.6 percent.

AssuredPartners Inc. led the pack with 16 announced transactions and continued its aggressive growth strategy by focusing on P/C and multiline retail firms. AssuredPartners closed 12 transactions in the East, three in the Midwest and three in the West.

Confie Seguros Insurance Services and Hub International Ltd. tied for second on the deal count list with 10 acquisitions each.In addition to acquiring seven P/C agencies, Confie Seguros acquired three program administrators, including managing general agents and managing general underwriters.

Hub’s U.S. acquisitions were scattered evenly throughout the country with a focus on P/C agencies.

Arthur J. Gallagher & Co., which led total deal activity in 2014, was fourth on the buyer list with nine U.S deals evenly spread between retail, wholesale, P/C, multiline and employee benefits firms.

National Financial Partners Corp. (NFP) completed seven acquisitions with the majority of targets being multiline agencies.

The top 10 buyers, as measured by deal count, were rounded out by The Hilb Group LLC (six), Acrisure LLC (five), Brown & Brown Inc. (five), Integro Ltd. (four) and Patriot National Insurance Group Inc. (four). Top 10 buyers that announced international acquisitions included: Hub, Gallagher, NFP and Integro.

The acquisition marketplace is on pace to break its 2014 record. Private equity-backed brokers increased deal activity by 49 percent from the first half of 2014 to the first half of 2015. While public broker activity has simmered, independent brokers, banks and insurance companies have more than picked up the slack in their search for growth and talent. With private equity facing large sums of capital yet to be deployed, the market is likely to continue the same activity level during the second half of 2015.

Securities offered through MarshBerry Capital Inc., Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co. Inc. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122 (phone:440-354-3230). Except where otherwise indicated, the information provided is based on matters as they exist as of the date of preparation. Past performance is not necessarily indicative of future results.

Merger and Acquisition Activity

April to June 2015

Sources: SNL Financial, Insurance Journal, other publicly available sources and MarshBerry proprietary databases
Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only.

Topics USA Agencies Insurance Wholesale Property Casualty A.J. Gallagher