Insurance Agent/Broker M&A Activity Hits 15-Quarter Low in Q1 2024

Amid rising interest rates and elevated valuations, Q1 sees a slowdown in M&A activity in the insurance distribution sector, OPTIS Partners reports
By: | April 22, 2024
Topics: Brokerage | M&A | News

The insurance distribution sector has experienced a slowdown in mergers and acquisitions (M&A) activity, with the first quarter of 2024 recording 155 transactions, the lowest in 15 quarters and down 18% from the same period of 2023, according to a report by OPTIS Partners.

The first quarter saw 53 distinct buyers of agencies and brokerages, with 26 being private-equity firms, 24 privately held and the remainder other, including publicly held firms. Notably, one private-equity firm and ten privately held firms announced their first deals in the quarter, while another private equity firm and two privately held firms announced their second deals.

Over the past eight quarters, there were 204 distinct buyers of agencies and brokerages, according to the report. Of these, 62% completed one deal, 11% completed two deals, and just 2% completed three, according to the report. The remaining 25% (51 firms) completed four or more deals and were classified as “active buyers.”

“The preceding data is indicative of a broadening distribution of deals among the active buyer universe,” according to the report. “The remaining buyers may be more opportunistic than strategic in their approach to M&A. It’s easy to imagine the reduction is a function of numerous factors including rising interest rates, elevated valuations, a smaller pool of targets, or a combination of these factors.”

PE-backed/hybrid buyers were responsible for 71% of all announced transactions in both Q1 2024 and Q1 2023. Privately-owned buyers reported 32 deals in Q1 2024 versus 41 in Q1 2023, while publicly traded brokers reported 12 transactions in Q1 2024 compared to 8 in Q1 2023.

This trend indicates a shift in M&A activity within the insurance distribution sector, with a more diverse range of buyers entering the market, per the report.

“There is little reason to believe that deal pace will decline from current levels. With 26 active private equity backed brokers and other very active buyers, all of which are still looking to deploy capital, the primary constraint may simply be on the supply side. Nonetheless, there are still a lot of agencies that will need to sell.”

Access the full report OPTIS here. &

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