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There were 158 mergers and acquisitions among insurance agents and brokers in the first quarter, down 17% from the year-earlier period, as higher interest rates and uncertain economic conditions continued to limit deals, Optis Partners LLC reported Tuesday.
Some of the traditionally most active buyers in the sector saw a significant slowdown in deals announced.
The first quarter of 2023 saw the lowest level of M&As among U.S. and Canadian agents and brokers since 2019 and was 7% below the five-year average for deals, the Chicago-based investment banking and financial consulting firm said.
“Considering the sharp rise in interest rates and economic uncertainty, it is no surprise that first-quarter activity was lower than last year’s,” said Steve Germundson, a partner at Optis Partners, in a statement.
The decline continued a trend that began in the second half of 2022.
The most active buyer in the first quarter was BroadStreet Partners Inc., with 14 deals, followed by Inszone Insurance Services LLC and Hub International Ltd., with 10 deals each; World Insurance Associates LLC, with nine; and Risk Strategies Co., with eight.
Several buyers that had been among the most active over the past five years, including Acrisure LLC, PCF Insurance Services, High Street Insurance Partners Inc. and Digital Insurance Inc., which does business as OneDigital, saw a significant drop-off in deal numbers in the quarter, the report said.
Private equity-backed groups and private brokers with significant outside financial support continued to dominate the M&A environment, accounting for 74% of transactions in the quarter.
The most active publicly traded brokerage was Arthur J. Gallagher & Co., with seven deals announced in the quarter.