We reported last year that global M&A in the insurance sector was rebounding after a decline resulting from the financial crisis. Now, the OPTIS Partners’ M&A database has reported a record high for North American insurance agency M&A in Q1 2016.
OPTIS reveals that an all-time high of 107 deals involving North American agencies were announced in Q1. Many transactions are unreported, meaning that there were likely even more deals.
This comes on the heels of OPTIS’ findings that 2015 was a record year for North American M&A, with 451 transactions.
The majority of transactions were carried out by private-equity backed brokers, which made 242 acquisitions in 2015 and 50 in Q1 of this year. OPTIS reported that insurance brokerages have proven to be a vehicle that can meet investors’ demands even in times of economic uncertainty and stock market volatility.
The majority of the acquisitions in Q1 of this year involved U.S. and Canadian agencies selling primarily property and casualty insurance, with 63 transactions of this type announced. There were 10 announced transactions of agencies selling employee benefits, and 21 transactions involving providers of mixed services. This is consistent with last year’s deals, where agencies focused on property and casualty insurance made up 57% of all sales.
This is good news for Canada, where the Insurance Bureau of Canada reported last year that the property and casualty insurance industry employed 118,800 Canadians as of 2013 and has $106.6 billion in invested assets. Continued interest and investment in property and casualty agencies will benefit Canadian business.
The author would like to thank Jacqueline Byers, articling student, for her assistance in preparing this legal update.
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