The number of mergers & acquisitions involving insurance agents and brokers totaled 782 in 2023, down 24% from 1,031 in 2022, according to a report by OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.

The fall reflects buyers either focusing on integrating the agencies they acquired during the 25-month buying spree that ended in 2022—when many owners sold their agencies fearing a potential increase in capital gains tax—or their need to digest substantial amounts of debt, according to the report.

However, despite the overall decline in the number of transactions from the prior year, there was a consistent volume of M&A transactions in 2023 with a slight increase in transactions each quarter. Deals in the second half of 2023 were up 4% over the first half of 2023 but down 27% over the second half of 2022.

“The second half of the year is usually busier than the first half, but 2023 is a story of consistent levels of deal activity throughout the year," said Steve Germundson, partner at OPTIS Partners.

Hub International completed the largest number of transactions during 2023 with 65 deals, followed by BroadStreet Partners with 59 deals, Inszone Insurance Services Inc. with 46, while Acrisure, Arthur J. Gallagher and World completed 36 transactions, according to the report. 

Of the 249 fewer deals done in 2023, two firms—Acrisure and PCF—accounted for nearly 60% of the decline, the report said. Acrisure completed 73 fewer deals in 2023 while PCF completed 67 fewer deals than prior year. 

The deal volume was lower for all buyer categories in 2023, especially for private equity-backed and hybrid buyers, which accounted for 70% of all transactions in the past 12 months, according to the report.

Nevertheless, the pace of deals is expected to pick up as the economy shows signs of stabilizing.

“Transactions in 2023 represent a return to the industry's deal pace experience before the 25-month-long wave of deals that started in December 2019," Germundson said. “When compared to the three years prior to that time, the deal count is actually up 11%, which is notable because the pool of sellers shrank by over 2,300 firms since December 2019."

Olivia Overman is IA content editor.