Insurance agency M&A seeing slowest pace since the pandemic

The P&C sector saw the most activity during Q1 2024 with a total of 106 deals, according to Optis Partners.

“This strength on the demand side and the perceived depletion of quality firms on the supply side is propping up values for the better firms despite economic fundamentals that have changed materially over the past two years,” Timothy J. Cunningham, Optis Partners managing partner, said in a release. Credit: izzuan/Stock.adobe.com

The first quarter of 2024 saw a total of 155 insurance agency mergers and acquisitions, which was 18% lower compared with Q1 2023, according to Optis Partners.

The deal activity seen during the recently closed quarter was the slowest since pandemic-mired Q2 2020, Optis reported. The first quarter of 2024 also marked the fifth consecutive quarter that the deal count was below the long-term trend line.

The following firms were the most active during 2024’s first quarter:

Active buyers during 2023’s first quarter that had decreased their activity during Q1 2024 included World Insurance, Patriot Growth, Choice Financial Group, The Hilb Group and NFP.

Further, Acrisure and PCF Insurance Services, which are typically extremely active buyers, greatly reduced purchases. Optis Partners reported the two firms accounted for 47% of the overall decline in deals during the past 12 months.

During Q1 2024, P&C agencies accounted for 62% of all transactions with a total of 106 deals. Benefits-focused agencies accounted for 13% of transactions, while agencies that sold both P&C and benefits accounted for 11% of sales during the quarter. All other sellers made up 15% of sales.

According to Optis Partners, buyers are still laden with capital to deploy, but active buyers are moving prudently and do not want to appear to be chasing deals.

“This strength on the demand side and the perceived depletion of quality firms on the supply side is propping up values for the better firms despite economic fundamentals that have changed materially over the past two years,” Timothy J. Cunningham, Optis managing partner, said in a release. “We don’t expect this to change any time soon.”

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