Announced and reported mergers and acquisitions for U.S. and Canadian insurance agents and brokers experienced a slight decline in 2016, finishing out the year with 449 deals compared with 456 in 2015.

This made 2016 the second-most active year in agent and broker M&A activity, falling only 1% short of the 2015 total but still more than 20% ahead of 2014, the next closest period.

As of Dec. 31, 2016, there had been nine consecutive quarterly transaction counts of 100 or more each, although the fourth quarter of 2016 just squeaked in at 103.

Prior to 2014, the only quarterly total greater than 100 was the fourth quarter of 2012 in advance of the tax law change on capital gains rates that became effective Jan. 1, 2013.

For the year, Caledonia, Michigan-based Acrisure L.L.C. reported the most activity with 63 closed transactions, up from 56 last year. Chicago-based Hub International Ltd. was second, completing 45 transactions, followed by Lake Mary, Floridabased AssuredPartners Inc. with 28, Columbus, Ohio-based BroadStreet Partners Inc. with 27 and Arthur J. Gallagher & Co. with 24 announced transactions.

Huntington Beach, California-based Confie and Richmond, Virginia-based The Hilb Group L.L.C. were the only other buyers with more than 10 transactions, with 17 and 11 respectively, while the remaining 142 buyers all reported fewer than 10 transactions, including 106 with only one acquisition.

Acrisure and Hub reported the biggest increase in deals compared with 2015, up by seven and eight deals respectively, followed by Atlanta-based OneDigital Health and Benefits with six, and Boston-based Risk Strategies Co. Inc. and New Yorkbased JenCap Holdings L.L.C. with four each. There were three firms with more than five fewer transactions in 2016 vs. 2015: Assured Partners declined to 28 in 2016 from 38 in 2015, followed by Daytona Beach, Florida-based Brown & Brown Inc. and New York-based NFP Corp., both down to seven in 2016 from 12 in 2015.

Private equity-backed buyers as a group accounted for 237, or 53%, of 2016’s reported transactions, consistent with 53% in 2015. Privately owned brokerage acquisitions increased to 124 in 2016 from 109 in 2015 and increased their share of the total to 28% from 24%. All the other categories of buyers reported fewer transactions in 2016.

Seven of the top 10 buyers in 2016 were private equity-backed firms, with Gallagher and Marsh & McLennan Agency L.L.C. as the two publicly traded firms in the top 10 and OneDigital rounding out the 10 most active.

Since the beginning of 2013, private equity-backed buyers have completed over 750 transactions out of the total reported 1,535 transactions, or 49%, compared with only 28% of the total — 360 of 1,300 total — for the five previous years. This has been the single biggest change in the M&A activity over the past eight to 10 years and has helped drive valuations to levels almost never seen before.

Property/casualty brokers continued to dominate the M&A landscape, but for the first time since 2013, the number of property/casualty brokerages sold declined, dipping to 240 in 2016 from 259 in 2015.

Only employee benefit brokerage transactions increased during 2016, up 20% to 90 in 2016 from 75 in 2015. The largest increase came from OneDigital as it returned to the active buyer group with eight transactions in 2016, up from two in 2015.

There were 149 separate buyers in 2016, down slightly from the 151 during 2015, while the 10 most active buyers accounted for 239 of the 449 reported transactions, or 53%, compared with the 244 out of the 456 total in 2015.

There were 16 firms reporting five or more transactions in 2016 compared with 17 in 2015. Four of the 2015 buyers — New York-based Integro Group Holdings L.P., Portsmouth, Virginia-based TowneBank, Cedar City, Utah-based Leavitt Group Enterprises and Fort Lauderdale, Florida-based Patriot National Inc. — fell out of this list, while three new buyers — OneDigital, Toronto-based Intact Financial Corp. and Fort Worth, Texas-based Higginbotham & Associates — joined the 2016 group.

In 2016, three of Business Insurance’s largest ranked agencies sold to private-equity backed buyers:

• No. 61 Sterling & Sterling sold to BroadStreet Partners in April.

• No. 101 Old National Insurance sold to Prime Risk Partners in June.

• No. 41 Mesirow Insurance Services sold to Alliant in July.

Already in 2017, Marsh & McLennan Agency L.L.C. has announced the acquisition of J. Smith Lanier & Co., ranked 30th in the 2016 Business Insurance ranking of the largest brokers of U.S. business.

M&A activity and agency valuations remain at historically high levels, and will not likely change anytime soon, barring some dramatic outside influences. Even with the 2016 M&A count off slightly from last year, Optis Partners L.L.C. expects a continuation of an active marketplace for the next year or two, with the private equity-backed firms leading the way. However, the days of double-digit growth in the number of transactions may be behind us. The U.S. economy continues to move forward across a wide spectrum of economic measures, while property/casualty insurance prices continue to experience modest softening. Interest rates remain at historic lows but have slowly started inching upward and will likely continue over the next several years.

Timothy J. Cunningham (left) and Daniel P. Menzer (right) are principals at Optis Partners L.L.C., a Chicago-based investment banking and financial consulting firm that serves the insurance distribution sector. Mr. Cunningham can be reached at 312-235-0081 or cunningham@optisins.com, and Mr. Menzer can be reached at 630-520-0490 or menzer@optisins.com.