Mergers and acquisitions (M&A) activity for the third quarter of 2014 was strong with 69 deals, helping propel the total deal count to a record 220 through September. We have not seen the deal count in the 200s at this point in the year since 2008, before the financial crisis. In 2013, there were 224 announced transactions for the full year. July, while the slowest month of this year, posted a respectable 18 deals, August followed with 24, and September knocked it out of the park with 27.
In the third quarter, 42 percent of all deals were of property/casualty firms, 32 percent were multi-line and 26 percent were employee benefits agencies. The wholesale segment, with 49 announced deals this year, comprised 22 percent of the deal count and has already surpassed prior annual totals.
On the buyer side, private-equity backed and independent agencies accounted for nearly 70 percent of all deal activity through the third quarter. Public brokers increased their activity for the first nine months to 17 percent of all activity, an increase of nearly 10 percent from the comparable prior year period. Insurance companies, banks and other buyers slightly declined from the prior year, rounding out the year-to-date activity with 14 percent of the pie.
We see the employee benefits space continuing to drive activity as large, national players recognize the opportunity in the benefits distribution platform. In addition, in the wake of healthcare reform, agencies with less than $3 million in revenue are finding that becoming part of a larger organization can provide the necessary tools to hopefully be successful going forward.
Top Buyers
The top five buyers for the year accounted for more than 30 percent of all activity.
Arthur J. Gallagher leads the year with 21 domestic deals announced, nearly half of them (10) coming in the third quarter. After completing five wholesale acquisitions in the second quarter, Gallagher bolstered its retail portfolio with nine of its 10 deals in the third quarter. With the acquisition of seven benefits firms in 2014, Gallagher continues to expand its employee benefits business, too.
AssuredPartners followed with 16 for the year, outpacing nine for the comparable period last year. AssuredPartners completed four of its deals in the third quarter, targeting retail/wholesale firms with P/C, benefits or multi-lines of business.
Hub International and Acrisure both completed 12 deals during the year. While Marsh & McLennan did not have third-quarter deal activity, it rounded out the top five with eight transactions.
Buyer Demand High
The market is saturated with capable buyers and we are seeing increasing amounts of competition. In our opinion, there is no shortage of demand, as buyers continue to supplement their weak organic growth with acquisitions.
The top five buyers this year completed three times as many deals during the first nine months of 2014 as they did for the comparable period last year.
There are also new buyers in the pool. Of the 104 different buyers this year, 46 got on the scoreboard for the first time with one deal, five of them completing multiple transactions.
With 220 announced transactions through the third quarter, the deal count is greater than any comparable period in more than a decade. As we begin to surf past last year’s total, it will be interesting to see how high we ride the tide.
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Merger and Acquisition Activity
July to September 2014
Announced Date | Buyer | Seller |
---|---|---|
08/01/14 | A.P. Michaud Insurance Agency Inc. | Nancy Greenwood Insurance Agency Inc. |
08/01/14 | Acrisure LLC | Wine Sergi & Co. LLC |
08/06/14 | Acrisure LLC | SMA Surety Inc. |
09/08/14 | Acrisure LLC | B&B Coverage LLC |
09/08/14 | Acrisure LLC | Signature Group LLC |
09/12/14 | Acrisure LLC | CLG Insurance |
09/04/14 | Alliant Insurance Services | Moloney O’Neill Inc. |
09/30/14 | Ames & Gough Inc. | Bixby Insurance Agency |
07/01/14 | AmWINS Group | Cabrillo Pacific Insurance Services LLC and Tidewater Pacific Adjusters |
07/18/14 | Arthur J. Gallagher & Co. | Foundation Strategies Inc. |
07/30/14 | Arthur J. Gallagher & Co. | Insurance Point LLC |
08/01/14 | Arthur J. Gallagher & Co. | Moore Insurance Services LLC |
08/06/14 | Arthur J. Gallagher & Co. | Denman Consulting Services Inc. |
08/08/14 | Arthur J. Gallagher & Co. | Trip Mate Inc |
08/11/14 | Arthur J. Gallagher & Co. | Cowles & Connell Inc. |
09/02/14 | Arthur J. Gallagher & Co. | Dezelan Insurance Agency Inc. |
09/08/14 | Arthur J. Gallagher & Co. | Everett James Inc. |
09/17/14 | Arthur J. Gallagher & Co. | Hagedorn & Co. |
09/22/14 | Arthur J. Gallagher & Co. | Benfield Group LLC |
07/03/14 | AssuredPartners Inc. | Ramsey Insurance Agency Inc. |
07/30/14 | AssuredPartners Inc. | Wright Group Services |
09/11/14 | AssuredPartners Inc. | Chicago location of Cygnet Underwriting Agency Inc. |
09/15/14 | AssuredPartners Inc. | Crawford Advisors LLC |
07/01/14 | Bigham Kliewer Chapman & Watts Insurance L.P. | Greater Texas Insurance Managers and Agency Inc. |
09/08/14 | Block Insurance | Child Care Business of Britton Gallagher |
08/19/14 | Bolton & Co. | Garner Consulting |
08/21/14 | Bryn Mawr Bank Corp. | Powers Craft Parker & Beard Inc. |
09/01/14 | CBIZ Inc. | Rognstad’s Inc. dba Sattler Insurance Agency |
08/06/14 | Confie Seguros Insurance Services | Alliance Insurance Agency Inc. |
08/06/14 | Confie Seguros Insurance Services | Bower Insurance Agency Inc. |
08/06/14 | Confie Seguros Insurance Services | Guess Insurance Services Inc. |
07/21/14 | Cross Insurance | Merchant Needham & Associates Insurance |
08/12/14 | Digital Insurance Inc. | Linden Group Health Services Inc. |
09/16/14 | Digital Insurance Inc. | Benefits Resource LLC |
09/18/14 | Digital Insurance Inc. | Clark Benefits Inc. |
09/18/14 | Digital Insurance Inc. | Drew Miller Insurance Services Inc. |
09/18/14 | Digital Insurance Inc. | Shargel & Co. Insurance Services Inc. |
07/17/14 | Edgewood Partners Insurance Center | Jenkins Insurance Services Inc. |
08/01/14 | Financial Institutions Inc. | Scott Danahy Naylon Co. Inc. |
08/08/14 | Health Insurance Innovations Inc. | American Service Insurance Agency LLC |
09/21/14 | HIA Insurance | Employer Benefit Systems Inc. |
07/03/14 | Higginbotham & Associates Inc. | Operations of Willis of Texas Inc. |
08/01/14 | Hilb Group LLC | Martin Agency Inc. |
07/02/14 | Hub International Ltd. | Free Market Insurance Agencies LLC |
08/04/14 | Hub International Ltd. | Ballard Insurance Agency |
09/04/14 | Hub International Ltd. | Peterson Milaney Insurance Associates Inc. |
07/09/14 | IMA Financial Group Inc. | Corporate Insurance Group Inc. |
09/22/14 | Insure.net LLC | Stark Insurance Agency |
08/29/14 | Ion Financial MHC | Drescher Insurance Agency Inc. |
07/24/14 | Leavitt Group Enterprises Inc. | Millennium Insurance Agency Inc. |
07/02/14 | LTC Financial Partners LLC | LTC Global Inc. |
07/02/14 | Mascoma Mutual Financial Services Corp. | Centurion Insurance Group |
07/31/14 | National Financial Partners Corp. | Benefit Resources Inc. |
08/08/14 | National Financial Partners Corp. | Altus Specialty Group LLC |
08/14/14 | National Financial Partners Corp. | Poulos Insurance Inc. |
09/15/14/td> | National General Holdings Corp. | Tower Personal Lines |
08/06/14 | Norman-Spencer Agency Inc. | Northern Star Management Inc. |
08/27/14 | One Risk Group LLC | Integrated Employee Benefit Solutions LLC |
07/16/14 | Onex Corp. | York Risk Services Group Inc. |
08/25/14 | Patriot National Insurance Group Inc. | Patriot Underwriters Inc. |
09/22/14 | Peoples Bancorp Inc. | Chrisman Insurance Agency Inc. |
09/03/14 | Propel Insurance | Assurety Northwest Inc. |
09/08/14 | Protector Holdings LLC | SavePro Insurance Solutions |
09/10/14 | R&R Insurance Services Inc. | Snyder Insurance Agency Inc. |
07/31/14 | Regions Financial Corp. | Zalowitz Frisch Employee Benefits LLC |
09/26/14 | Risk Strategies Company LLC | DeWitt Stern Group Inc. |
09/09/14 | Texas Wasatch Insurance Services LP | Goosehead Insurance Agency LLC |
07/01/14 | Univest Corp. of Pennsylvania | Sterner Insurance Associates Inc. |
08/01/14 | World Insurance Associates LLC | Assets of Creative Insurance Services Inc. |
Sources: SNL Financial, Insurance Journal, other publicly available sources and MarshBerry proprietary databases
Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only.
Topics Employee Benefits
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