Insurance Agency M&A Sets Scorching Pace in First Half of 2014, OPTIS Partners' Report Reveals

CHICAGO, IL--(Marketwired - Aug 5, 2014) - There were 165 announced merger and acquisition transactions of insurance agencies in the US and Canada in the first six months of 2014, OPTIS Partners' new survey reveals. That's a jump of nearly 40 percent over the same period in 2013 and the most active first half since the firm began tracking transactions in 2008. It's also the second most-active six-month period OPTIS has ever recorded.

"We predict there will be robust M&A activity going forward as more agencies owned by retiring Baby Boomers continue to go to market," said Timothy J. Cunningham, managing director of OPTIS, an investment banking and financial consulting firm specializing in the insurance industry. 

The report covers property/casualty agencies, agencies selling both P/C and employee benefits, and employee benefits agencies.

Private-equity-backed firms were the most active buyers year-to-date, accounting for 67 agency purchases. They were followed by privately owned brokers (54 deals), publicly held brokers (27 deals), banks (nine deals) and insurance companies/ others (eight deals). 

"It looks like the first half of 2014 is the start of a prolonged active period for agent-broker M&A transactions," Cunningham said. "The agency-brokerage business is awash with Baby Boomer principals. It's estimated that more than 30% of all the equity in the system is owned by them. The industry has not adequately addressed perpetuation/succession planning. Without a sound perpetuation plan in place, the only option for many of aging principals will be to sell to a third party -- often PE-backed and public brokers -- to capitalize the value of their agency."

The full report can be read online at http://optisins.com/articles/M&A_Report-June_2014.pdf.

OPTIS Partners (www.optisins.com) is ranked as the fourth most active agent-broker M&A advisory firm by SNL Financial in 2014.

Focused exclusively on the insurance distribution marketplace, OPTIS offers merger & acquisition representation to buyers and sellers, including due-diligence reviews; appraisals of fair market value; financial performance review, including trend analysis and internal controls; ownership transition and perpetuation planning; quality control; E&O loss control; and process improvement. Offices are in Chicago and Minneapolis.