One might think that the end of 2010 and beginning of 2011 could be an indicator that this year could be a busy one from a mergers and acquisitions standpoint, but an executive with Reagan Consulting believes the current rate of activity over the past five weeks will not be sustained.
During the first five days of the New Year, there were a total of 18 acquisitions announced by brokers, including deals involving brokers regarded as major M&A players and some other, lesser-known firms.
This activity came on the heels of a busy December, when a total of 12 acquisitions were announced, concluding a year that had not seen a significant amount of M&A activity overall.
Brian Deitz, senior vice president for Atlanta-based Reagan Consulting, said that viewing the broad picture, 2011 stands a good chance of being a stronger year for acquisition activity after a quiet 2009-2010.
While buyers were looking, sellers were hesitant in 2010, concerned about pricing and their ability to make a decent earn-out over the life of the sales agreement.
However, the recent spate of acquisition activity is not a new wave of deal-making but the culmination of a lot of deals that have been in the works as the firms worked to capitalize on lower capital gain rates.
“The first week is not indicative of the pace for the entire year,” said Mr. Deitz.
He said there is a feeling of cautious optimism that 2011 will be a pretty decent year for the M&A market, but the main driver will be sellers who feel confident about closing the deal.
During the month of December, two of the most prolific insurance brokerage firm acquirers, Arthur J. Gallagher and Brown & Brown Inc., announced seven acquisitions between them.
There were also five other announced acquisitions in December:
- Marsh & McLennan Agencies’ acquisition of Trion Group.
- USI’s acquisition of Mastors & Servant
- Aon’s acquisition of Insurance.ie
- Integro’s acquisition of Reinsurance Advisory Services.
- Ryan Specialty’s acquisition of OakBridge Insurance Services.
Among the deals announced in the first few days of January, Marsh & McLennan Agencies (MMA), a subsidiary of insurance broker Marsh, said it acquired RJF Agencies Inc. of Minneapolis and Alpharetta, Ga.-based Strategic Benefit Solutions Inc.
Strategic Benefit, a benefits brokerage and consulting firm with approximately $4 million in revenue, was founded in 1998 and offers a wide-range of employee benefits services to middle market clients. The firm will operate within the Rutherfoord division of MMA.
Founded in 1986, RJF has annual revenue of approximately $25 million and roughly 150 employees. The firm provides property and casualty insurance and employee benefits to middle market companies in a wide range of industries. RJF has specialty practices in manufacturing, condominium and townhome associations, management liability, and contractors, among others. All of RJF’s employees and leadership team, including Bill Jeatran, chief executive officer, and Tim Fleming, president, will join MMA.
MMA said RJF will serve as the firm’s upper Midwest hub.
Chicago-based insurance broker HUB International announced the acquisition of six agencies over a two-day period.
The firm said it acquired Phoenix Insurance Group Grande Prairie Inc., based in Grande Prairie, Alberta, Canada, and Farr Insurance Group of Venice, Fla.
Established 12 years ago, Grande Prairie arranges commercial and personal lines programs for a wide array of customers, with a niche in oil and gas production.
Grande Prairie will become part of HUB International Barton within the HUB International Canada West region.
The three partners of Grande Prairie–Bruce George, Mark Marcotte and Elizabeth Fiegehen–will join HUB Barton as part of this acquisition, reporting to Richard Burley, vice president of HUB Barton.
In December last year, HUB announced it signed letters of intent to acquire other operations within Phoenix, including Edmonton, Red Deer, Hinton and Drayton Valley, in the first quarter of 2011.
Farr Insurance, founded in 1978, works with approximately 10,000 clients throughout the state of Florida, with a large concentration in Sarasota County. The firm places homeowners, automobile and flood insurance for personal lines customers in the Venice region, as well as commercial insurance programs.
Farr Insurance will become part of HUB International Northeast Ltd. The principals of Farr Insurance, Latimer and Cindy Farr, will join HUB and continue to operate out of their existing locations in Venice and Sarasota, Fla.
Other deals HUB announced included:
- Benefit Resources Inc., a retail employee benefits insurance brokerage firm in Colorado Springs, Colo.
- Sander A. Kessler & Assoc., a Santa Monica, Calif.-based insurance brokerage firm.
- Hall-Conway-Jackson Inc. and Cascade Insurance Group Inc., both Bothell, Wash.-based insurance brokerage and employee benefit firms that share joint ownership.
- Davis & Graeber Insurance Services Inc. of Redlands, Calif.
Daytona Beach, Fla.-based insurance broker Brown & Brown said it acquired Balcos Insurance Inc. and M C H Inc. of Seattle, d.b.a. Mike Howard Insurance.
Founded in 1985, Balcos Insurance serves clients throughout the western United States. With annual revenues of approximately $3 million, Balcos offers a broad spectrum of personal lines and commercial lines insurance, as well as specialized products and services for the restaurant and hospitality, automotive service and repair, construction, and manufacturing and distribution industries, among other specialty niches.
Mike Howard Insurance, with annual revenues of approximately $500,000, has provided its individual and business clients in the greater Seattle area and throughout the state of Washington with a variety of personal, life and commercial insurance products and services since 1992.
With completion of the transaction, Brown & Brown of Washington will operate from two new locations in Seattle and Bellingham, Wash., under the direction of Mark Balcos, principal of Balcos insurance.
Wells Fargo Insurance Services USA Inc., a subsidiary of San Francisco bank Wells Fargo & Co., said it has acquired Prestige Professional Plans, a single office employee benefits insurance brokerage firm located in Dayton, Ohio.
Serving customers in Ohio since 1985, Prestige Professional provides business and individual customers with employee benefits consulting and brokerage services including medical, dental, life, vision, disability and various other health insurance plans.
Two firms that are not major acquisition players also announced some M&A activity.
Alliant Insurance Services, a specialty insurance brokerage firm based in Newport Beach, Calif., said that it has acquired New York City-based T&H Group.
T&H Group is a regional full-service insurance brokerage firm that operated as Tanenbaum-Harber Co. until changing its name in 2010. It was established in 1860 and primarily targets upper middle market clients throughout the eastern region of the country.
T&H has 242 employees in offices in nine states: New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Maryland, Illinois, Florida and California.
Also announced last week, Kingston, N.Y.-based Ryan & Ryan Insurance Brokers Inc. acquired Reis Turck Associates’ insurance portfolio.
The acquisition–the second since Ryan & Ryan opened in 2009–increases the firm’s annual sales by 25 percent, with an insurance portfolio that now covers more than 1,100 clients.
In Nashville, Wilson Smith Group, LLC (WSG) said it has acquired a majority of the outstanding shares of the Nashville-based managing general agency Greenwich Transportation Underwriters Inc. (GTU).
GTU has been a leading provider to producers of transportation insurance, primarily for truckers, for 30 years.
Mark Smith, president and managing member of WSG, called the acquisition “an important and strategic transaction in the growth and development of the Wilson Smith Group.”
Financial terms of all of the transactions were not released.