Agent/Broker M&A slow, but healthy

Agent and broker mergers and acquisitions in the United States have slowed since the 2006-2008 boom, but market fundamentals are in place for continued, targeted activity, according to “Down But Not Out: The M&A Marketplace for Insurance Agencies and Brokerages in 2009,” a new report from Reagan Consulting. The report states the increase in activity and value during 2006-2008 was driven by three primary factors: 1. Public brokers, the most active buying group, enjoyed strong market valuations during a soft commercial P&C market. 2. Equity capital and low borrowing costs made leveraged acquisitions an attractive means of generating high investor returns. 3. Banks were continuing their acquisitive entry and expansion into the insurance distribution space. The Reagan report points to four uncertainties that are dampening deal-making in the current marketplace: the economic recession; political uncertainty concerning healthcare reform and capital gains taxes; the continued soft market; and the weakened performance of agencies.