This year’s first-quarter insurance agency mergers and acquisitions were down to the lowest total since Q1 2019, according to a recent report from OPTIS Partners.
The total number of transactions (158) showed a 17% drop from Q1 2022 (190) and was 7% lower than the five-year average.
While the total deal count for Q1 2023 (158) is lower compared to Q4 2022 (190) and Q1 2022, it’s close to the three- and five-year historical averages, said the investment banking and financial consulting firm specializing in the insurance industry.
Top Buyers in Q1 2023
OPTIS Partners’ M&A database tracks buyers by four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers and all others. The private equity-backed/hybrid group of buyers maintained their dominance on the buying side with 74% of all transactions for the quarter, while transactions between private parties accounted for 17%.
Top buyers by company in Q1 2023 include:
- BroadStreet Partners – 14 deals
- Inszone Insurance Services and Hub International – 10 deals each
- World Insurance Associates – 9 deals
- Risk Strategies Company – 8 deals
- Keystone Agency Partners and Arthur J. Gallagher – 7 deals each
- Choice Financial Group and Acrisure – 6 deals each
- NFP – 5 deals
Some buyers that have been very active over the last five years slowed or shut off activity – including, most notably, PCF, Acrisure, HighStreet Partner and OneDigital.
“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.
Top Sellers in Q1 2023
OPTIS Partners’ tracking places sellers in four categories: property/casualty agencies, employee benefits agencies, combination P&C/benefits agencies and all others. “All others” 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.
Top sellers by category in Q1 2023 include:
- Property & casualty – 87 (55% of the total)
- P&C/benefits agencies – 34 (22%)
- Benefits agencies – 13 (8%)
- All other – 24 (15%)
“We’re experiencing the other side of a nine-quarter deal bubble that began in Q4 ’20,” Steve Germundson, a partner at OPTIS Partners. “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.”
Topics Mergers & Acquisitions
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