Insurance agencies stayed hot homes in 2019, with another record year of merger-and-acquisition activity, but activity appears to be slowing due to COVID-19. OPTIS Partners launched first-half M&S information today revealing a downturn on insurance firm activity
.&There were 288 revealed insurance firm M&An offers during the very first half of 2020, below 328 in 2019, according to OPTIS. It was the most affordable six-month duration overall considering that 2017.”A few of the active purchasers continued to push forward with their M&A strategy while others have actually slowed their acquisition speed till more is
known about the effect and duration of the pandemic,”stated Timothy J. Cunningham, handling partner of OPTIS Partners, an investment banking and monetary consulting company specializing in the insurance coverage market. OPTIS breaks down purchasers into four groups: private equity-backed/hybrid brokers, privately held brokers, openly held brokers, and all others.
The private equity-backed/hybrid group of purchasers increased their share of all transactions compared to the first half of 2019, accounting for 69 % of all deals vs. 65 % last year. P&C sellers represented 143 of the overall 288 transactions(50 %), constant with their percentage of the overalls in the last few years, OPTIS reported. “We expect the slow-down to continue provided the current explosion of the COVID-19 infections and anticipated reinstatement of numerous social and business limitations,”stated Daniel P. Menzer, partner. Dealing In 2019 Prior to the COVID-19 pandemic, insurance
company M&A was a robust market. An overall of 649 M&An offers were closed in 2019, up 40 % from 2016, said Chip Roame, managing partner of Tiburon Strategic Advisors. Tiburon consists of insurance companies and third-party administrators among its financial advisor M&A statistics. Accrisure led the way with 98 acquisitions in 2019. The company touts itself as” the market’s fastest-growing insurance broker, delivering high-quality insurance coverage and risk management services and options through our global network of Company Partners.”
Accrisure has closed 410 M&An offers considering that 2015. Hub International is in 2nd place, with 51 handle 2019 and 241 because 2013.
In general, the monetary services market is seeing skyrocketing M&A activity throughout sectors, Roame pointed out. In the financial advisor world, an overall of 1,033 M&A deals were closed in 2019, up from 699 in 2016 and 414 in 2013.
There were 133 independent advisor M&A deals in 2015, up from 103 in 2018 and just 54 in 2014.
When you consider the variety of consultants expected to retire over the next decade, these numbers will likely climb much greater, Roame said.
“Could this number be 5,000 a year in a few years? Yeah, it could,” he said. “That would be what the data would recommend, that this number needs to keep increasing. Due to the fact that consultants, a lot of them are baby boomers and they’re going to offer their services, or they’re definitely going to retire and they’re most likely going to sell their businesses.”
Among fee-based monetary consultants (RIAs), there were 123 M&A handle 2019, also a record high. Roame expected this number to go much greater.
“My guess is five, ten years from now, this number might be 1,000 each year,” he stated. “I believe we’re at the early stages of this pattern today. So definitely it’s a slope up, however I don’t believe 123 deals is all that numerous in the huge scheme of life.”
Roame included a trio of forecasts for the insurance coverage world:
- “Moderate development” in the varieties of insurance agency and third-party administrator companies being acquired going forward.
- Insurance coverage companies will be the primary targets.
- Retail banks to return as the most regular acquirers.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of everyday journalism. John may be reached at [ email safeguarded] Follow him on Twitter @INNJohnH.
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