Since late 2008 it's been widely reported that insurance mergers and acquisitions have been down and out. The deal activity that did occur was led largely by a new group of independent agency and private equity-funded buyers that capitalized on opportunities traditional M&A heavyweights had to pass on.
However, optimistic reports from advisors began to surface as early as mid-2009, including a June report from Deloitte that reported "insurance M&A likely to increase in late 2009." Activity has increased in the second half of 2009, and deals are occurring in all buyer segments. Today, both the traditional buyers of agencies and the new group of buyers, including Marsh & McLennan Agency and a new set of private equity-backed firms, are looking for deals, albeit with a refined palette in search of quality.
Down, not out
According to Timothy Cunningham, principal of Chicago-based OPTIS Partners LLC, the pace of M&A activity is historically set by conventional buyers such as Arthur J. Gallagher & Co., Hub International and Brown & Brown Insurance. "When economic calamity partnered with the soft insurance market in 2008-2009, these buyers pulled back significantly," he said.
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