Deals involving wholesalers in the excess and surplus lines market are expected to continue, say observers.

Examples include the $570 million acquisition of Roseland, N.J.-based Crump Group Inc. by Winston Salem, N.C.-based BB&T Insurance Services Inc. in 2012, which resulted in the April merger of Crump Insurance Services Inc. into CRC Insurance Services Inc.

More consolidation is expected, say observers. James Drinkwater, property/casualty brokerage division president of AmWINS Group Inc. in New York, said consolidation will continue. “Obviously, retail clients view scale as an important factor when considering the wholesale distribution channel,” he said.

“I do think it's becoming increasingly apparent that size can make a difference, in that not only do you just get critical mass, but the resources that you're able to bring to your customers,” said Ronald S. Austin, chief operating officer of wholesaler Los Angeles-based Worldwide Facilities Inc.

Alan J. Kaufman, chairman, president and CEO of Farmington Hills, Mich.-based Burns & Wilcox Ltd., said there will be further consolidation in the market “because of the financial strength that's needed to compete and to continue to reinvest in the company.”

Mr. Kaufman said, “If you do not have scale, it's going to be difficult to continue to do business, and the insurance companies understandably have concerns about their cost of operations, and they are mindful” of the number of distributors with whom they can do business.

Timothy W. Turner, Chicago-based president and CEO of R-T Specialty L.L.C., a division of Ryan Specialty Group L.L.C., said there will continue to be more consolidation with “larger, more sophisticated platforms.”

Private equity also may continue to be a factor in the market. Last year, there was a definitive agreement by Charlotte, N.C.-based AmWINS Group Inc. for a $1.3 billion recapitalization with New York-based private equity firm New Mountain Capital L.L.C., which acquired a 70% interest in the wholesale brokerage. AmWINS already was ranked as the No. 1 wholesale brokerage by Business Insurance, and retains that position with $6.67 billion in 2012 premium volume.

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Mr. Drinkwater said he anticipates continued interest by private equity firms in the wholesale market. “Private equity companies obviously like this space on both the wholesale side and the retail side,” he said.

“Private equity appears to continue to be interested in our space,” said Mr. Austin. “It says good things about the business,” he added.

Standard & Poor's Corp. director Polina Chernyak said, “Private equity is very much interested” in wholesalers because of the margins the business can generate.

Deals will continue in the insurer, wholesale and retail side of the business, said Matt Nichols, president of Hunt Valley, Md.-based All Risks Ltd. and president of the Kansas city, Mo.-based National Association of Professional Surplus Lines Offices Inc.

“We all expect that to continue. There's an awful lot of deals being looked at here, although it has to be "wait and see' as to whether they will be ultimately consummated,” he said. “We'll continue to see some of the larger independents out there combine with other entities,” Mr. Nicholas said, adding that his firm will continue to remain independent.