19 Feb The Latest Insights for the Insurance Industry
Tony Calvacca, CBI – The NYBB Group
Trend: Consolidation Uptick among Insurers and Brokers
According to the Quarter 3 Industry Update from First Research by Dun & Bradstreet and M&A Source, the market for insurance agencies and brokerages is currently a ‘soft market’, or often referred to as a buyers’ market. While this doesn’t offer great potential for those who are looking to sell, it is providing valuable opportunities for agencies and brokerages looking to grow.
The industry update states, “Facing soft market conditions, insurance brokerages can benefit from mergers and acquisitions that allow them to expand geographic reach, diversify product offerings, and increase efficiencies.” With a large number of companies available on the market, firms that are looking to expand have a plethora of options right now.
Many firms have already headed to the market for strategic acquisitions, looking to boost their resiliency in the current market conditions. In recent years, the insurance industry has experienced soft pricing, tougher regulations, and fierce competition, especially in established and saturated markets. A notable recent transaction following this trend is the acquisition of Jardine Lloyd Thompson late in 2018. Global professional services firm Marsh & McLennan acquired the agency for $5.7 billion, making it the largest brokerage industry deal since 2015. Favorably, the deal set Marsh & McLennan up to expand in high-growth emerging markets in Asia and Latin America, solidify its presence in the UK, and strengthen its risk-brokering and reinsurance operations.
While many firms aren’t necessarily working with $14+ billion in revenue or looking to fund a $5.7 billion acquisition, now is certainly an excellent time to consider an acquisition. The market is flooded with available companies and prices are lower because of the high supply. If your company is in growth mode, an acquisition is something to strongly consider.
Evaluating the areas where your company could benefit from strengthening by acquisition, or opportunities for growth via acquisition, can be a daunting task to take on by yourself. Working with an M&A advisor who is an expert in the market is an excellent choice. The right professional will know what qualities to look for in a prospective acquisition to help you find the right fit to achieve your goals for your company.
If you would like to discuss this article or schedule a private and complementary consultation, please contact Tony at Tony@nybbinc.com or 631-390-9650.