There were 155 announced insurance agency mergers & acquisitions in the first quarter of 2024, down 18% from 188 in the same period in 2023, according to OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry. This marks the slowest quarter since the second quarter of 2020 and five consecutive quarters where deals have fallen below the long-term trend line from a deal-count perspective.

“On a trailing, 12-month basis, we're back to levels that we last witnessed at the end of 2020," said Steve Germundson, partner, OPTIS Partners.

The deal analysis also found that a few big buyers pulling back from M&A activity has had an outsized impact on the numbers announced, but experts expect a continuation of a healthy M&A marketplace.

“Although a few very active buyers have stood down over the past year to integrate operations, bolster balance sheets, or reconsider their strategy, a healthy number of buyers are still pursuing deals," said Timothy J. Cunningham, managing partner, OPTIS.

“Past perennial leaders Acrisure and PCF accounted for 47% of the overall decline in deal count over the past 12 months," OPTIS said in its report. Notably, it took an increase from 11 firms to make up for this deficit, including BroadStreet Partners, which increased its pace and recorded the most transactions in the first quarter of 2024 with 29 deals, followed by Hub International at 12, Inszone Insurance Services at 10, and Keystone Agency Partners at eight.

Analysis from M&A deals in the first quarter of 2024 also unveiled that private equity-backed buyers accounted for 71% of all transactions and property & casualty sellers accounted for 62% of transactions.

In 2023, deals were down 24% from 2022, according to a report by OPTIS Partners. Its research said that the fall reflected 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.

Will Jones is IA editor-in-chief.