Insurance M&A slips again during first half of 2024
OPTIS Partners spotlights insurance dealmaking trends as players increasingly leverage cyber needs before closing.
Insurance agency mergers and acquisitions backpedaled 20% the first half of 2024, marking the sixth consecutive quarter of declines and the lowest first half totals in four years.
Data compiled by OPTIS Partners showed just 300 announced deals over the period, compared to 385 announced over the same time in 2023.
“While some formerly very active buyers became relatively inactive, it appears that a few are picking up the pace slightly,” OPTIS Managing Partner Timothy J. Cunningham said in a release. “Others that didn’t slow down in the recent economic downturn indeed have increased their buying pace.”
Broad Street Buyers led all buyers the first half of 2024 with 46 transactions, followed by Inszone Insurance Services with 27, and Hub International with 26, according to OPTIS Partners.
A recent Gartner survey showed 60% of organizations will use cybersecurity risk as a primary determinant when engaging in M&A activity by 2025.
Amid rising cybersecurity risk and intensifying M&A activity, dealmakers are pushing for insurance before any papers are signed.
“There is a growing appetite for transactional risk insurance,” Michael Wakefield said, executive vice president and transactional insurance practice leader at CAC Specialty.
“At a high level, transactional risk insurance allows deal parties to transfer risk relating to an M&A transaction to insurance carriers,” he said. “Representations and Warranties Insurance (RWI), tax, and contingent risk are all types of transactional risk insurance covering breaches of representations and warranties made by the seller in the purchase agreement. When used in an M&A context, tax and contingent risk insurance generally cover known risks identified during diligence.”
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