Insurance agency/brokerage mergers and acquisitions activity in the first half of 2021 returned to normal volumes following a second-half 2020 race to the exits that set record deal activity. Will the backend of 2021 be a repeat of last year? Let us look.

The total number of U.S. and Canadian property/casualty, benefits, managing general agents and third-party administrator transactions during the first half of 2021 was up 10% to 338 from 307, an all-time high though only 5% above the five-year average. On a quarterly basis, there were 181 transactions during the second quarter of this year, compared with 131 reported in the same period for 2020, a 38% increase. On a trailing 12-month basis, current deal count is 882, much higher than the 791 reported in 2020 and 630 reported for the previous 12 months.

This backs up what sellers, buyers and advisers are all experiencing: The pace of M&A continues to rise.

It’s no surprise that the private equity world continues to drive this increase, with the more established firms generally keeping pace with their historical activity, fairly new firms starting to hit their stride with increased activity and several brand-new entrants starting to close some deals.

Grand Rapids, Michigan-based Acrisure LLC continues to complete more transactions than all other buyers and reported 31 deals for the first six months of the year, down from 39 in the first half of 2020 and well below its five-year first-half average of 40. PCF Insurance Services in Woodland Hills, California, followed with 22, up 69% from 13 reported in the same period last year and three in 2019. Lake Mary, Florida-based Assured Partners Inc. logged 21 transactions, up from 19 in the first half of 2020 and slightly above its first-half average of 18, and BroadStreet Partners Inc. in Columbus, Ohio, recorded 19, approximating its five-year average of 18 first-half deals. 

In total, the 10 most active buyers booked 51% of the announced transactions. There were 134 buyers in total that completed the remaining 49% of the deals, 29 of which made more than one acquisition.

Historically active buyers whose transaction count in the first half of 2021 dropped below their first half five-year average included Acrisure, with nine fewer, Hub with eight fewer, Alera with two fewer, and BroadStreet with one fewer.

The number of deals being done is on the rise across most segments, and it is important to note that the overall pace of large agency transactions is on the rise this year as well. Whereas we recorded only two large M&A transactions among retail agencies in the first half of 2020, there have been seven logged so far in 2021 (see chart).

Not included in the chart is the announcement of BRP Group’s purchase of RogersGray Inc. ($38.8 million revenue), effective July 1, 2021, and there could be more announcements coming. 

Further, there was one notable private equity-related transaction announced in the second quarter: Huron Capital sold its interest in High Street Partners to Abry Partners, which had recently exited Confie Seguros.

We and many pundits believe that deal count for 2021 will be at an all-time high. Both anecdotal and data-driven evidence in the first half of the year are strong indicators this will be true. 

Timothy J. Cunningham, Daniel P. Menzer and Steven E. Germundson are principals at Optis Partners LLC, a Chicago-based investment banking and financial consulting firm that serves the insurance distribution sector. Mr. Cunningham can be reached at cunningham@optisins.com or 312-235-0081; Mr. Menzer can be reached at menzer@optisins.com or 630-520-0490; and Mr. Germundson can be reached at germundson@optisins.com or 612-718-0598.