The level of merger and acquisition activity within the insurance distribution system has been active for years. Up until recently, the volume of activity has been driven by financial institutions, consolidators and the public brokers–excluding the top three. Over that same time period, the prices being paid have trended up largely due to the aggressive pricing of financial institution buyers. But recently, private equity investors have made a big splash in this sector. What are the implications for agents and brokers?
Historically, private equity has been a part of the landscape, but they have not driven the market–either based on the volume of activity, or the aggressiveness of their pricing and valuations.
The necessity of these private equity firms to liquidate their investments in five-to-seven years while achieving high rates of return have limited the values that such investors are willing to put on insurance agency/brokerage operations.
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