M&A Activity Continues at a Snail’s Pace Compared to 2008

By | August 3, 2009

Insurance brokerage mergers and acquisitions in the second quarter of 2009 was nearly half of what is was during the second quarter of 2008. Just 39 transactions were announced from April through June compared to last year when 71 transactions were announced during the same time period. Lackluster M&A activity has been the theme during the first half of the year which is down 40 percent from last year with just 90 announced transactions.

Arthur J. Gallagher (AJG) is the most active acquirer year-to-date. AJG announced seven acquisitions or approximately 8 percent of all transactions. AJG’s largest acquisition in 2009 came with the purchase of the policy renewal rights from Liberty Mutual Insurance Co. and Wausau Signature Agency LLC with a total potential deal value of approximately $165 million. Three of the seven transactions were of agencies located in Texas. Four of the announcements came in the second quarter.

Hub International (Hub) is not far behind AJG with five acquisitions in 2009. Like AJG, Hub acquired renewal rights to Liberty Mutual’s middle market commercial P/C business. Four acquisitions occurred in the second quarter with two wholesale agency purchases in Canada and two retail agency purchases in Washington. Hub found itself on the other side of a transaction when it divested of non-core assets in Florida. Hub sold Hub International Florida to Hector Fortun, the former owner of the Florida-based brokerage that was purchased by Hub in 2006.

Another acquirer found itself divesting of a previously purchased asset when the executive team of Sovereign Benefits Consulting (SBC) purchased the assets from Sovereign Bank in June. SBC was formerly known as hartz consulting group llc when the bank purchased the agency in 2006. The rebranded agency is now called Banyan Consulting.

Brown & Brown (B&B) and Ascension Insurance are tied as the third most acquisitive broker with four deals each. The slower M&A pace is evident when looking at B&B’s acquisition activity this year versus last year when it had already 18 transactions through June.

Ascension Insurance has acquired eight brokerages with revenues of $75 million since its formation. Expanding its commercial and employee benefits capabilities on the West Coast and adding specializations in student health insurance, employee benefits for non-profit organizations and claims administration, Ascension acquired three California-based agencies in June.

Insurance brokerage deal volume in 2009 is on track to be the lowest in nine years. While activity picked up a tad in June, it doesn’t compare to the past two years. Third quarter activity, which is historically slower, won’t break any records, but it may follow the trend set at the end of the second quarter and pick up slightly.

Merger & Acquisition Activity: April – June 2009

Announced Date Buyer Seller Seller Description
05/27/09 Ameriana Bancorp Chapin-Hayworth Insurance Agency Inc. IN, Retail P&C Agency
06/05/09 American Financial Group Inc. Non-profit and employment liability book from AUSCO IL, Wholesale P&C Agency
06/29/09 Apex Global Partners Inc. Corrigan Jordan Insurance Agency TX, Retail P&C Agency
05/18/09 Arthur J. Gallagher & Co. Nourse Insurance Brokers Inc. CA, Retail P&C Agency
05/08/09 Arthur J. Gallagher & Co. Sellers Group LLC TX, Retail Benefits Agency (Value: $2.0MM)
06/04/09 Arthur J. Gallagher & Co. Creative Benefit Solutions LLC KY, Retail Benefits Agency
06/10/09 Arthur J. Gallagher & Co. Walker Taylor Agency Inc. NC, Retail P&C Agency (Value $3.3MM)
06/19/09 Ascension Insurance Inc. Renaissance Agencies Inc. CA, Retail Benefits Agency
06/19/09 Ascension Insurance Inc. Portal Group Holdings Inc. CA, Retail P&C Agency (Revenue $7.0MM)
06/19/09 Ascension Insurance Inc. Personal Insurance Administrators Inc. CA, Retail Benefits TPA
05/06/09 Bollinger Inc. Gail Steinberg & Co. Inc. NY, Retail Benefits Agency
04/10/09 Brown & Brown Inc. W.R. Reed & Co. OR, Retail P&C Agency
05/12/09 Brown & Brown Inc. Irving Weber Associates Inc. NY, Retail P&C Agency
04/27/09 City Holding Co. Patton Insurance Agency and Dickens & Clark WV, Retail P&C Agencies Insurance Agency
04/16/09 Fortegra Financial Corp. Bliss & Glennon Inc. CA, Wholesale P&C Agency
04/28/09 Hector Fortun Hub International Florida from Hub International Limited FL, Retail P&C Agency
04/14/09 Higginbotham & Associates Key & Piskuran Insurance Agency LLC TX, Retail P&C Agency
04/02/09 Hub International Limited Norac Intermediaries Canada, Wholesale P&C Agency
04/02/09 Hub International Limited Best Advice Financial Services Canada, Wholesale Benefits Agency
05/22/09 Hub International Limited Meier Insurance Agency Inc. WA, Retail P&C Agency
05/27/09 Hub International Limited Rettenmier Benefits Group Inc. WA, Retail Benefits Agency
06/25/09 Management of Sovereign Sovereign Benefits Consulting, Inc. from Sovereign Bank PA, Retail P&C Agency Benefits Consulting Inc.
05/19/09 Northeast Bancorp Goodrich Insurance Associates Inc. ME, Retail P&C Agency (Value: $0.7MM)
04/17/09 Wells Fargo & Co. North Coast Surety Insurance Services and North Coast CA, Retail P&C Agencies Surety Technologies
06/04/09 Wells Fargo & Co. Grady & Associates NV, Retail Benefits Agency

Topics Florida Mergers & Acquisitions Agencies A.J. Gallagher Property Casualty Canada

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