Insurance agents, brokers M&A deals rise 30% to over 1000 in 2021

INSURANCE AGENTS and brokers saw mergers and acquisition transactions amongst themselves rise by 30 percent to 1,034 last year compared to 2020, a report has revealed.

The report prepared by Optis Partners LLC shows that the sector continues to have a look-in from well-funded investors who see it as attractive with owners of brokerages capitalising on this, taking advantage of high valuations for their companies while capital gains tax rates are low, Optis Partners, a United Statesbased investment banking and financial consultancy said in the report.

“If 2020 was a boom year for mergers and acquisitions, 2021 was a virtual explosion,” Steve Germundson, partner at Optis Partners, said in a statement. In the fourth quarter, 384 M&A deals involving U.S. and Canadian brokers and agents were announced, a 26 percent increase over the same period in 2020 and a 32 percent increase over the third quarter.

“The fourth quarter rush to close deals by year-end clearly taxed the sellers’ deal teams, legal counsel and due-diligence providers. We expect a bit of a first-quarter respite before the cycle picks up again,” Germundson said.

Acrisure, a Grand Rapids, Michigan-based firm was the most active buyer for the second year, with 122 transactions in 2021, but for the first time in several years another buyer, Woodlands Hills, California-based PCF Insurance Services LLC, came close with 99 transactions completed. Chicago-based Hub International Ltd. was the third most active buyer with 61 acquisitions, followed by Traverse City, Michiganbased High Street Insurance Partners Inc. with 56 and Lake Mary, Florida-based AssuredPartners Inc. with 51.

Private equity-backed buyers and buyers with substantial outside financial support again dominated brokerage M&As in 2021, accounting for 76 percent of total deals.