There were 535 announced insurance agency mergers and acquisitions through the first three quarters of 2024, down 10% from 594 in the same period in 2023, according to OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.

While down, the pace of deal activity appears to be stabilizing, with 198 deals announced in the third quarter of 2024, which is up 14% from 173 in the second quarter of 2024 and up 21% from 164 in the first quarter of 2024. Year-over-year deal activity is down 5% from the third quarter of 2023 and 13% below the previous five-year average, according to the report.

“Nevertheless, we've seen two quarters of increasing deal count after six consecutive quarters of the count falling," said Steve Germundson, a partner at OPTIS Partners. “While two quarters do not a trend make, we believe that we're at or near the bottom of the deal-flow trough."

With some large acquisitions in 2024, including Aon's purchase of NFP and Marsh McLennan Agency's acquisition of McGriff Insurance Services, “we look for more large deals to be announced as the big firms chase growth," says Timothy J. Cunningham, OPTIS managing partner.

Property & casualty sellers accounted for 349 transactions (65%), benefits agencies sales totaled 75 (14%), and there were 52 sales of p&c and benefits agencies (10%). All other sellers accounted for 59 sales (11%). Firms that fall into the life insurance and financial services area are included in the “other" category and represent 18, or 3%, of the total transactions.

Among the most active buyers in 2024, BroadStreet Partners led the industry with 68 deals, which is 51% higher than the same period last year and twice its previous five-year average. Hub and Inszone had 39 and 38 deals, respectively. While Hub's pace of deal-making is 13% below the prior year, Inszone's pace has increased significantly each year since 2020, when it completed four deals. Patriot Growth rounded out the top four and nearly doubled its transactions over the prior year, the report said.

In total, there were 87 unique buyers in insurance distribution-related businesses through the first three quarters of 2024, 71 of which made fewer than 10 transactions and 41 which made just one. Twenty-five of these firms announced their first acquisition.

More than half of all deals, 292, were done by the 10 most active acquirers, all private equity (PE)-backed firms other than privately held Leavitt Group and publicly traded Arthur J. Gallagher & Co.

“Some may call the deal flow today as the 'new normal' though we're more likely to call it the 'old normal,'" Cunningham said. “Deal volume is still off from the peak, but it is also above pre-2021 flow."

“We continue to see a large number of potential sellers in the industry, both long-established agencies owned by baby boomers as well as those that started up in the last five to 10 years," Germundson said. “That certain level of regeneration is an interesting dynamic, and often those firms are showing real organic growth."

“A stabilizing economy is also empowering buyers, both established and those looking to enter the market," Germundson added.

Olivia Overman is IA content editor.