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M&A Market Update May 2022

The Latest Deals and Insights

Who’s buying? Who’s selling? And why should you care? Phil Trem highlights the current M&A market and provides a look at transactions through the first four months of the year.

What’s Next — More Clarity or Uncertainty?

The world around us continues to evolve at a rapid pace. Many are still searching for solid ground as we are moving through the world post–pandemic. There is unrest globally, inflation is impacting all Americans, and the Federal Reserve is raising interest rates in an effort to slow down the economy. Higher interest rates drive higher borrowing costs which eventually leads to less consumer spending. This, theoretically, will help curb the increasing costs across the country. The higher rates will also mean higher borrowing costs for the buyers in the Insurance Distribution space. But will higher borrowing rates slow down the pace of M&A in our space? It really depends on what period you are comparing the results to.

We expect a very active M&A environment in insurance distribution for years to come. Many firms still lack a viable perpetuation plan (although it is not too late) and buyers remain flush with capital to continue an aggressive acquisition strategy. However, will the increase in costs tempt buyers to pass that expense down to sellers — effectively lower valuations? It is certainly possible but there remains more demand than supply and the demand may offset buyers’ desire to lower pricing. If they are not aggressive, will they still remain competitive? We will continue to keep a close eye on it.

Private Capital backed buyers accounted for 92 of the 123 transactions (74.8%) through April, which is consistent with the proportion of announced transactions observed in 2021. Total deals by these buyers have increased at a Compound Annual Growth Rate (CAGR) of 26.9% since 2018. Announced transactions by Independent Agencies continued to decline in 2022. On average, 23.1% of deals were completed by Independent Agencies from 2018–2021 compared to 8.1% in 2022.

High valuations and availability of capital could be two of the main drivers for this section of buyers’ decline in deal activity. The portion of deals involving specialty distributors has also continued to increase year over year, contributing 26.0% of total deals in 2022 compared to 22.8% in 2021. As more and more traditional retail brokers continue to establish and expand specialty practices, we anticipate this trend to continue.

Strong deal activity from the marketplace’s most active acquirers has remained constant to begin 2022. Ten buyers accounted for 53.7% of all announced transactions observed, while the top three account for 22.8% of the 123 total transactions.


Of All Announced Transactions were Accounted for By Top 3 Buyers

Recent Notable Transactions:

March 1:

Hub International Limited and Bold Penguin announced an agreement to acquire Insureon Holdings. Insureon is a digital insurance agency that delivers small–business insurance through its online marketplace. As a part of the transaction, Hub acquires Insureon’s digital insurance agency and brand, while Bold Penguin acquires its technology platform.

April 12:

Distinguished Programs announced that it had entered into a definitive agreement with Aquiline Capital Partners LLC to acquire a majority stake in the Company. Distinguished Programs is one of the largest independent program managers in the country and underwrites and distributes 14 different programs with an approach centered on technology.

April 25:

Lockton Affinity announced its acquisition of SBG, Inc. The acquisition complements Lockton’s existing business and is part of a larger strategic vision to fully support RIA’s, financial advisors, and other financial professionals. Based in Minnetonka, MN, SBG provides wholesale distribution of annuities, life insurance, long–term care, and disability insurance.

2022 Acquisition Detail (YTD 4/30/2022)

Who’s Buying:
Insurance Broker – Independent: 10
Insurance Broker – Public: 9
Insurance Broker – Private Capital Backed: 92
Insurance Company and Other: 8
Bank & Thrift: 4
What’s Being Bought:
Full Service: 29
P&C: 66
Employee Benefits: 28
Retail vs. Specialty:
Retail: 91
Wholesale: 19
MGA: 13

2022 Year-to-Date Most Active Buyers

Active Buyers List for May 2022

Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only. Scorecard year–to–date totals may change from month to month should an acquirer notify MarshBerry or the public of a prior acquisition. 2022 statistics are preliminary and may change in future publications. Please feel free to send any announcements to M& Source: S&P Global Market Intelligence, http://www., and other publicly available sources as of 4/30/22.

Insurance Industry Trends and Insights: WayPoint by MarshBerry