The number of insurance agency mergers and acquisitions declined slightly during the first half of 2013, with 122 reported transactions in the U.S. and Canada compared with 133 deals last year, according to OPTIS Partners, a Chicago-based investment banking and financial consulting firm specializing in insurance.
“It was a period of relative calm after the perfect storm of getting deals done before the capital gains tax-hike,” said OPTIS Partner Timothy J. Cunningham. “This year's numbers are inflated somewhat because many of the deals reported in January and some in February probably closed in 2012.”
OPTIS reported 76 transactions in first-quarter 2013, but just 46 in the second quarter.
Privately owned brokers were the biggest buyers, making 45 acquisitions compared to 40 during the same period in 2012. Private-equity-backed brokers made 40 acquisitions, the same number as last year. Deals conducted by publicly owned brokers fell from 30 to 18, while banks made 14 acquisitions, up from 10.
Hub International accounted for 14 deals in the first half of the year, followed by Arthur J. Gallagher (nine deals), and Digital insurance (seven).
Sales of property-casualty-focused agencies stood at 46. There were 30 deals for agencies selling both P&C and employee benefits, 36 sales of employee benefits-only agencies, and 10 other transactions, primarily MGAs being sold.
“We don't expect to see a comparable level of activity for the remainder of 2013 as we saw in 2012, but we also strongly believe that over the long term, M&A activity will continue to grow,” Cunningham said. “There are plenty of buyers with readily available funds in the marketplace today. Buyers need the growth acquisitions provide, and the demand will continue to keep valuations attractive to sellers.”
A complete copy of the report is available at http://optisins.com/articles/M&A_Analysis_Final.pdf.
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