Although Laura Mazzuca Toops, editor of our sister publication,American Agent & Broker, reported in our November edition thatthe red-hot agency acquisitions market had slowed, deals involvingE&S/specialty lines brokers and insurers continued at a furiouspace for most of the year before then.

Laura's report from the Eighth Annual Summit Meeting of theTarget Market Program Administrators Association in Tempe, Ariz.,said that in spite of a slowdown stemming from shriveling capitaland a dwindling pool of candidates, smart buyers and sellers couldstill work out profitable deals where combinations make strategicsense and transactions are well planned.

Similar advice was revealed in a number of articles we publishedin our newsletters this year.

“While principals at some excess and surplus lines brokeragesmight believe their primary perpetuation goal is to negotiate thebest prices they can for their shops, successful acquirers saytheir primary focus is making sure the merging cultures mesh,” wereported in our October edition in an article titled, “Cultural FitHelps Drive E&S Broker Merger Success.”

Starting off the year with articles in our March and Aprileditions advising sellers about the selection of deal partners andadvisers, along with more specific advice about private equitydeals from PE executive themselves, even then there werepredictions about a possible deal slowdown and declines in loftymultiples being paid.

But in our earliest reports, including our March article,“Private Equity Deals No Automatic Exit For Sellers Of WholesaleBrokerages,” the forecasts were balanced by pronouncements aboutcompetition among PE firms to put capital that had already beenraised for acquisitions to work in 2008.

Also in our April edition, executives from firms that were someof the hottest prospects for PE firms and other acquirers–programmanagers–offered warnings about situations to avoid in that month'sfeature article: “Program Managers Warn Of Unwanted M&AConsequences.”

“Selling out may seem like a lucrative proposition for programmanagers being wooed by carriers, but those who sign on tohigh-priced acquisition deals are in danger of killing theirentrepreneurial spirit,” veteran program administrators warned,according to our account.

Even specialty insurance carriers themselves voiced concernsabout M&A activity heating up in the E&S/specialty sector.In a companion piece, we noted that some carriers, focusing ondeals in which one wholesale broker or managing general agency buysanother, said that when they were blindsided by such deals,relationships with acquired firms could cease.

Putting all the warnings and advice aside, our monthlynewsletters revealed a string of deals that hadn't ended even afterthe most recent edition was delivered.

Earlier this month, Bermuda-based AXIS went all the way toAustralia to pick up an MGA called Dexta Corporation Pty. In lateNovember, Columbus, Ohio-based State Auto Mutual, an insurancegroup primarily engaged in writing personal auto insurance, said itagreed to acquire Rockhill Insurance, a specialty property-casualtygroup also based in Columbus.

Throughout the year, deals by U.S firms were fueled by factors,such as falling insurance prices and motivations, to diversifyproducts and expand beyond U.S. borders, while a weak dollar hadforeign buyers eyeing takeovers of U.S. specialists in 2008.

After Munich Re said it would buy The Midland Company for $1.3billion in October 2007, the M&A floodgates opened.

The following deals were announced in late 2007 and early 2008and reported on in E&S/ Specialty Lines Extra this year.

DECEMBER 2007:

o ACE Ltd. said it would buy Combined Insurance Company ofAmerica from Aon for $2.4 billion.

o American Financial Group became majority shareholder inMarketform Group Limited, a Lloyd's insurer.

JANUARY 2008:

o QBE Holdings Inc. announced a $146 million deal forMichigan-based North Pointe Holdings Corp..

o HCC Insurance Holdings, Inc. acquired Indianapolis-basedMultiNational Underwriters, LLC.

o Atlanta-based wholesaler Swett & Crawford Group said itacquired another wholesale brokerage, Risk Reducers, LLC, aworkers' compensation specialist

o A.J. Gallagher & Co. picked up AVRECO, a wholesaler andMGA from The Park Group.

FEBRUARY 2008:

o Meadowbrook Insurance Group announced a $273 million mergerdeal with ProCentury, closing the deal in July.

MARCH 2008:

o Bermuda-based Argo said its subsidiary, Trident InsuranceServices, acquired the MGA Massamont Insurance Agency Inc.

o Philadelphia Consolidated Holding Corp. of Bala Cynwyd, Pa.,acquired Gillingham & Associates, which specializes incommercial insurance for the outdoor recreation and hospitalityindustries

APRIL 2008:

o Farmington Hills, Mich-based Burns & Wilcox said it wouldform a new business entity with C.J. Coleman & Company, aLondon-based wholesaler.

o Bermuda-based Argo Group International Holdings made a $272million cash offer to buy Heritage Underwriting Agency, Plc, aLloyd's insurer, wrapping the deal up in May.

JUNE 2008:

o Canton, Mass.-based OneBeacon Insurance Group agreed to buyEntertainment Brokers International Insurance, an MGA specializingin entertainment, sports and leisure industries.

o Hudson Insurance Group in Stamford, Conn. said it wouldacquire Hooghuis Group LLC, an underwriting agency specializing inU.S. directors and officers liability insurance.

JULY 2008:

o Japanese insurer Tokio Marine Holdings said it is buyingPhiladelphia Consolidated Holding Corp. for $4.7 billion.

o Bermuda-based Allied World Assurance Company Holdings agreedto buy Darwin Professional Underwriters Inc., a U.S. specialtyinsurer, for $550 million.

o Bermuda-based Ironshore proposed to buy Lloyd's Syndicate 4000and Pembroke Managing Agency from Chaucer for about $34million.

o American International Group Inc. said it acquired AscotUnderwriting Holdings Ltd., the managing agency of AIG's Lloyd'sSyndicate 1414.

o First Reserve Corp., a Greenwich, Conn.-based private equityfirm, put $720 million into launching Torus Insurance, an insurertargeting energy risks.

o Kansas City, Mo.-based Rockhill Insurance Company acquiredNational Environmental Coverage Corporation.

o Seattle-based SeaBright Insurance Holdings said that itswholesale broker subsidiary, PointSure Insurance Services, hasacquired three wholesale broker divisions of Black/White Group.

AUGUST 2008:

o New York-based Tower Group Inc. said it plans to acquireCastlePoint for about $490 million

SEPTEMBER 2008:

o Tower Group said a CastlePoint subsidiary will acquire WhitePlains, N.Y.-based Hermitage Insurance for $135 million.

o CRC Insurance Services Inc. acquired Sumter, S.C.-basedSouthern Risk Operations, LLC.

o Hallmark Financial Services acquired 80 percent of Heath XS,LLC for $15 million.