Insurance Brokerage Merger & Acquisition Market Report

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December 4, 2014

Banks appear to be more acquisitive in the insurance agency space compared to prior years.  Some bank transactions announced during 2014 include the following deals:
  • Regions Insurance (an affiliate of Regions Bank) acquiring Teaberry Health and Welfare Benefits Practice's book of business in St. Petersburg, Florida.
  • First Commonwealth Insurance Agency (a subsidiary of First Commonwealth Financial) acquiring Thompson/McLay Insurance Associates in Indiana, Pennsylvania.
  • Bryn Mawr Bank acquiring Powers Craft Parker & Beard in Rosemont, Pennsylvania (a suburb of Philadelphia).
  • Univest acquiring Sterner Insurance Associates with offices in Coopersburg and Wyomissing, Pennsylvania.
  • Financial Institutions acquiring Scott Danahy Naylon in Amherst, New York (a suburb of Buffalo).
  • Towne Insurance (a subsidiary of TowneBank) acquiring Southern Insurance Agency in Kitty Hawk, North Carolina.
  • Eastern Insurance Group (a subsidiary of Eastern Bank) acquiring Smith Buckley & Hunt in Brockton, Massachusetts (a suburb of Boston).
  • BancorpSouth Insurance Services (a subsidiary of BancorpSouth Bank) acquiring Knox Insurance Group in Lafayette, Louisiana.
November 8, 2014

Some regional brokers are providing added competition to the national consolidators in the hunt for insurance agency acquisitions.  In just the past 30 days, the following brokers announced these transactions:
  • Lawley Insurance acquired S. Turteltaub Sons in northern New Jersey.  Lawley is the 54th* largest U.S. broker and headquartered in Buffalo, New York.
  • Heffernan Insurance Brokers acquired Pilot Employee Benefits in Long Island, New York.  Heffernan is the 35th* largest U.S. broker and headquartered in Walnut Creek, California.
  • The Horton Group acquired Boyle, Flagg and Seaman Insurance with offices in Illinois and Michigan.  Horton is the 58th* largest U.S. broker and headquartered in Orland Park, Illinois.
  • Starkweather & Shepley Insurance Brokerage acquired Universal Insurance Agency in Smithfield, Rhode Island.  Starkweather & Shepley is the 69th* largest U.S. broker and headquartered in East Providence, Rhode Island.
  • Frenkel and Company acquired The Moyer Group in New York, New York.  Frenkel is the 46th* largest U.S. broker and headquartered in New York, New York.
Source:
* Business Insurance - 100 Largest Brokers of U.S. Business - July 21, 2014

October 3, 2014

Risk Strategies Company announced that it had merged with DeWitt Stern Group creating an organization with almost $100 million in revenue.  DeWitt Stern, based in New York, has approximately 140 employees with specialties in fine art, entertainment & media, and executive liability insurance.  This merger builds on top of two purchases Risk Strategies Company had made earlier this year with its acquisition of both Singer Nelson Charlmers and DataRisk.  Risk Strategies Company is backed by Kohlberg & Company, a private equity firm based in New York.

September 5, 2014

Willis Group Holdings divests some additional offices with its agreement to sell seven of its United States retail locations to USI Insurance Services.  The offices involved are Wilmington, Delaware; Vero Beach, Florida; Savannah, Georgia; Moline, Illinois; Wichita, Kansas; and both Cheyenne and Mills, Wyoming.  This transaction comes on the heels of the sale of some of Willis' Texas offices (see July 8, 2014 post) and Willis' Northern New England operations (see May 2, 2014 post).

August 8, 2014

Edgewood Partners Insurance Center ("EPIC") significantly adds to its revenue base with the acquisition of Jenkins Insurance Services ("Jenkins") from Leavitt Group Enterprises and existing shareholders of Jenkins.  Jenkins, with 160 employees and $34 million of revenue, has offices in California and Nevada.  EPIC currently generates over $150 million in revenue and is looking to grow this number to $250 million by 2018 according to its press release announcement.

On the wholesale side, Ladenburg Thalmann Financial Services acquired Highland Capital Brokerage ("Highland") for approximately $42 million.  Highland is a wholesale broker providing life insurance, annuities, and long-term care solutions to investment and insurance providers.  Highland had revenue of $46 million for the trailing twelve months ended June 30, 2014.

July 8, 2014

Integro accelerates its acquisition pace with a couple of insurance broker purchases in California during the month of June.  It acquired Daugherty Insurance Services, a multi-lines retail agency based in Stockton, and Lugo & Associates Insurance Services, an employee benefits specialist based in Newport Beach.

Meanwhile, Higginbotham continues its expansion in Texas with the purchase of a portion of Willis of Texas, Inc.'s operations.  The transaction involves 35 employees in San Antonio, McAllen, Victoria, and Tyler.  Higginbotham has approximately 650 employees and 23 offices throughout the state of Texas.

June 9, 2014

Marsh & McLennan Agency acquired the largest independent insurance agency in North Carolina through its purchase of Senn Dunn Insurance.  Senn Dunn has annual revenue of approximately $30 million and 155 employees with offices in Greensboro, Raleigh, Charlotte, High Point, and Wilmington.

A couple of regional brokers made acquisitions on the East Coast as well:
  • The Hilb Group, headquartered in Richmond, Virginia, acquired Newman Crane & Associates based in Orlando, Florida.  The Hilb Group was founded by Robert H. Hilb (former founder, CEO, and Chairman of Hilb, Rogal and Hobbs) and Robert J. Hilb (former VP of Hilb, Rogal and Hobbs).  The firm is backed by BHMS Investments, a private equity firm located in New York City.
  • Declaration Brokerage, headquartered in Mahwah, New Jersey, acquired RBLA of PA located in Stroudsburg, Pennsylvania.  Capacity Coverage Company of New Jersey and Dowling Capital Partners formed Declaration Brokerage in 2013 with the intent of acquiring commercial insurance brokers in the Mid-Atlantic and Northeastern United States.
May 2, 2014

Cross Insurance continues to grow its presence in the New England area with the acquisition of Troy, Pires & Allen Insurance.  Cross Insurance had previously acquired the northern New England operations of Willis taking on its approximately 70 employees earlier this year.  It also purchased The Insurance Exchange and The Driscoll Agency during 2014 bringing its acquisition total to four so far this year.  With offices in Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, and Florida, Cross Insurance has acquired more than 100 insurance agencies since inception in 1954.

April 4, 2014

BB&T Insurance recently announced a couple of acquisitions after having been on the sidelines since its purchase of insurance wholesaler Crump in the early part of 2012.  The bank-owned insurance broker agreed to acquire Woodbury, a multi-lines insurance agency with more than 50 employees and offices in North Carolina and South Carolina.  It also bought Caledonian Insurance Group, an aviation insurance specialist based near Seattle with 24 employees.

March 14, 2014

AssuredPartners continues its aggressive acquisition spree in 2014 racking up 8 purchases of insurance agencies during the first two months of the year.  Some of its more notable transactions during the past twelve months include the acquisition of Lee F. Murphy (based in St. Paul, Minnesota with $8 million in revenue), AHM Financial Group's insurance business (based in St. Louis, Missouri with $17 million in revenue), Leonard Insurance Services (based in North Canton, Ohio with $10 million in revenue), Commercial Insurance Services (based in West Virginia with $10 million in revenue), and AirSure Limited (based in Golden, Colorado with $13 million in revenue).  From its founding in 2011, AssuredPartners has rapidly grown to approximately $325 million in annualized revenue.

February 7, 2014

A flurry of M&A announcements were made over the past few weeks providing a busy start to 2014.  Some notable acquisitions include:
  • Marsh & McLennan's acquisition of Barney & Barney, the country's 34th largest insurance broker with approximately $100 million in revenue.  Based in San Diego, California, Barney & Barney will serve as Marsh & McLennan Agency's western regional hub.
  • USI Insurance Services' acquisition of 42 Wells Fargo's insurance brokerage locations.  According to a Bloomberg article, about 750 employees will be affected by the divestiture of these offices.
  • Brown & Brown's acquisition of The Wright Insurance Group ("Wright") from Aquiline Capital Partners. Wright, which has programs operations relating to flood insurance and government entities, is projected to have net revenue of $121 million and EBITDA of $58.8 million for the first twelve months after closing of the transaction.
  • Edgewood Partners Insurance Center ("EPIC")'s acquisition of The McCart Group, a retail property & casualty and employee benefits insurance firm based in Atlanta, Georgia.  The McCart Group has approximately $20 million in revenue and will serve as EPIC's first significant regional platform outside of California.
January 3, 2014

USI Insurance Services picked up a former top 100 insurance broker in Van Gilder Insurance Corporation expanding its presence in the Rocky Mountain area.  Van Gilder, based out of Denver, Colorado, had approximately $20 million in revenue according to the latest figures provided in Business Insurance's 100 largest brokers list (dated July 16, 2012).  In addition, USI purchased Molton, Allen & Williams, a multi-lines insurance agency headquartered in Birmingham, Alabama.

In other developments, bank acquisitions of insurance brokers appear to be picking up from depressed levels. BancorpSouth agreed to acquire GEM Insurance Agencies, which has approximately $9 million in revenue and is based out of Houston, Texas.  Old National Bancorp announced that it was acquiring a book of business from Wells Fargo Insurance's Evansville, Indiana office as well.

December 10, 2013

Edgewood Partners Insurance Center ("EPIC") has a new private equity owner after The Carlyle Group announced that it agreed to acquire a controlling equity stake in the company.  Stone Point Capital, which funded the startup of EPIC in 2007, will remain an investor in the company.  Headquartered in California, EPIC has approximately $80 million in annual revenue.

In the wholesale and reinsurance space, AmWINS Group announced that it is acquiring Bliss & Glennon and eReinsure from Fortegra Financial Corporation.  Bliss & Glennon is an excess and surplus ("E&S") lines wholesale insurance broker and managing general agency ("MGA") and was ranked by Business Insurance in September 2013 as the 10th largest P&C wholesaler with $229 million in premium.  eReinsure provides Internet-based technology solutions for managing the placement of facultative reinsurance.

November 6, 2013

Ryan Specialty Group announced another insurance wholesale broker acquisition with its agreement to merge with Westrope.  Headquartered in Kansas City, Westrope is the 7th largest wholesale broker in the U.S. according to Business Insurance.

In the rumor mill, Edgewood Partners Holdings is reportedly being shopped around by its private equity owner, Stone Point Capital, according to a Bloomberg article.  Edgewood (based in San Mateo, California) has over $80 million in revenue as listed on its website.

October 4, 2013

A couple of significant transactions outside of the traditional retail brokerage space made the news in September. Jardine Lloyd Thompson Group ("JLT") announced that it will be acquiring Towers Watson's reinsurance brokerage business for $250 million in cash.  Towers Watson's reinsurance brokerage business generated revenue of $166 million and pretax profit of $26 million for the year ended June 30, 2013, making it the fourth largest reinsurance broker in the world.  An article by The Insurance Insider that provides background on the events leading up to the deal can be viewed here by way of SNL.

In the wholesale arena, Ryan Specialty Group ("RSG") announced that it acquired S.H. Smith & Company, a wholesale broker with more than 90 employees.  RSG is a holding company consisting of managing general agents ("MGAs"), managing general underwriters ("MGUs"), wholesale operations, a Lloyd's specialty insurer, and other entities offering specialty services to agents, brokers, and insurance carriers.  RSG was formed by Patrick Ryan who previously was the founder and CEO of Aon.

September 6, 2013

Two more top 100 brokers officially announced a change in ownership as previously reported rumors became reality during the month of August.  Hub International agreed to be acquired by Hellman & Friedman in a transaction valuing the company at approximately $4.4 billion.  It was earlier reported (see May 3, 2013 post) that Hub's owners, Apax Partners and Morgan Stanley Principal Investments, had begun exploring a sale in April.  Hub is projected to have 2013 revenue of $1.2 billion.

Meanwhile, Arthur J. Gallagher announced that it was acquiring Bollinger from Evercore Capital Partners.  Total gross consideration was $312 million in cash and stock with net consideration being approximately $277 million once the value of tax assets acquired is factored in.  Rumors had begun surfacing in February (see February 6, 2013 post) that Evercore had begun the sale process of Bollinger.  The New Jersey-based broker is expected to generate over $100 million in revenue and approximately $40 million of EBITDAC (earnings before interest, taxes, depreciation, amortization, and the change in estimated acquisition earnout payables).

August 3, 2013

According to a Crain's Chicago Business article, Arthur J. Gallagher is in advanced discussions to acquire Bollinger Insurance.  Bloomberg had previously reported (see February 6, 2013 post) that the owner of Bollinger, Evercore Partners, had begun gathering bids for the New Jersey-based insurance broker.  The Bloomberg report mentioned that AssuredPartners, owned by GTCR, was also another top suitor in the bidding process.

July 8, 2013

Risk Strategies Company ("RSC") becomes the latest insurance broker to partner with a private equity firm after announcing that Kohlberg & Company has acquired a majority interest in the firm.  Headquartered in Boston, RSC had 2011 revenue of $41 million according to Business Insurance's 100 largest brokers list.  As part of the transaction, Roger Egan will join RSC as Executive Chairman after having previous stints as CEO of Integro and President at Marsh Inc.

June 12, 2013

Brown & Brown's acquisition of Beecher Carlson Holdings from Austin Ventures continues the trend of private equity backed brokers changing ownership.  Beecher Carlson had net revenue of $105.6 million in 2012, with headquarters in Atlanta, Georgia.  This transaction is expected to close in July of 2013.

May 3, 2013

A month after National Financial Partners ("NFP") announced that it was exploring a sale, the firm agreed to be acquired by Madison Dearborn Partners in a transaction valuing NFP's equity at approximately $1.3 billion.  This private equity transaction is expected to close in the third quarter.

Meanwhile, another top 100 insurance broker may change hands as Hub International is reported to be in the initial stages of exploring a sale.  Apax Partners and Morgan Stanley Principal Investments, the current owners of Hub, took the broker private in 2007.  Hub had 2011 revenue of approximately $571 million according to Business Insurance's ranking of the 100 largest U.S. brokers.

April 5, 2013

National Financial Partners ("NFP") announced in the middle of March that it was exploring the potential sale of the company as a result of private equity overtures.  TPG and Madison Dearborn Partners are currently rumored to be the final bidders for the company.  NFP, which provides benefits, insurance, and wealth management services, had revenue of $1.1 billion during 2012.

March 4, 2013

Digital Insurance, a specialist in employee benefits for small and mid-sized companies, had an acquisitive month in February with the purchase of three benefits firms.  Digital, itself, was recently acquired by Fidelity National Financial in January.  Digital had approximately $50 million in revenue during 2012 and acquired 18 benefits agencies during 2011 and 2012.

Private equity activity also continues with Genstar Capital's acquisition of Acrisure, which is based out of Grand Rapids, Michigan.  With a footprint primarily focused on the Midwest, Acrisure had 2010 revenue1 of $29 million and was previously owned by GCP Capital Partners.  Genstar is no stranger to the insurance brokerage sector having recently sold Confie Seguros in November 2012.

Source: 
1 Business Insurance - 100 Largest Brokers of U.S. Business - July 18, 2011

February 6, 2013

Rumors have been floating around that Evercore Capital Partners, the private equity owner of Bollinger, is exploring a sale of the top 100 insurance broker.  Bollinger had approximately $118 million in 2011 revenue according to Business Insurance.

Meanwhile, another private equity firm, Lightyear Capital announced in January the closing of its controlling investment in Cooper Gay Swett & Crawford ("CGSC").  CGSC had revenue of $344 million and EBITDA of $69 million in 2011.

December 27, 2012

There was a flurry of deals during November and December as sellers were motivated in part to take advantage of current capital gains tax rates.  As a result, several top 100 insurance brokers changed hands including:
  • The sale of USI Insurance Services to Onex.  USI had $659 million in revenue1 and was previously owned by GS Capital Partners, a Goldman Sachs private equity fund.
  • The sale of Alliant Insurance Services to KKR.  Alliant had $460 million in revenue1 and was previously owned by Blackstone.
  • The sale of Confie Seguros to ABRY Partners.  Confie Seguros had $180 million in P&C revenue2 and was previously owned by Genstar Capital.
In the middle market, Marsh & McLennan Agency continued its acquisition spree acquiring various agencies throughout the country such as Howalt+McDowell Insurance ($16 million in revenue and based in South Dakota), Protector Group ($14 million in revenue and based in Massachusetts), and Brower Insurance Agency ($24 million in revenue and based in Ohio).

On the wholesale side, AmWINS Group announced it was acquiring Gresham & Associates, which was ranked by Business Insurance as the sixth-largest managing general agent.  AmWINS itself is under new ownership having been recapitalized by New Mountain Capital earlier this year.

Sources:
1 Business Insurance - 100 Largest Brokers of U.S. Business - July 16, 2012
2 Insurance Journal - Top 100 Privately Held Property/Casualty Agencies - August 6, 2012

October 11, 2012

National Financial Partners ("NFP") continues the buildout of its property & casualty ("P&C") insurance business with the acquisition of Lane McVicker, a personal lines P&C provider to high net worth clients.  Lane McVicker, having approximately $8 million of annualized revenue, was a portfolio company of Stone Point Capital.  NFP had previously acquired Lapre Scali & Company Insurance Services in the middle of last year to serve as a platform for its P&C business.  Lapre Scali had approximately $21 million in annualized revenue at the time of acquisition.

September 16, 2012

USI Insurance Services hasn't let rumors of its sale by a Goldman Sachs' private equity fund get in the way of its acquisition efforts.  It picked up two significant bank-owned insurance brokerage operations, one from TD Bank having $58.2 million in revenue and one from BBVA Compass having $26.7 million in revenue, during the past few months.

July 17, 2012

The decision by the Supreme Court to uphold most of the healthcare reform law passed by Congress will likely lead to further acquisition activity of benefits firms.  Some owners of benefits firms may decide that they need to align themselves with larger firms that have additional resources and capabilities to deal with the complexities of this healthcare reform legislation.  Some views on the future role of insurance agencies in the group benefits business can be viewed here with East Coast and West Coast perspectives.

May 1, 2012

A synopsis of acquisition activity by the three primary groups of acquirers within the insurance brokerage sector is summarized below.
  • Publicly traded brokers - Arthur J. GallagherBrown & Brown, and Marsh & McLennan have been aggressive in snapping up insurance brokers and are expected to maintain this pace during 2012.  Arthur J. Gallagher acquired $277 million of annualized revenue in 2011 with a significant portion driven by the purchase of international broker Heath Lambert Group, which is expected to contribute $158 million of annualized revenue.  Brown & Brown for its part acquired 38 insurance agencies in 2011 and announced in December 2011 the acquisition of Arrowhead General Insurance Agency, a program manager and managing general agent ("MGA") with approximately $105 million in revenue.  Marsh & McLennan announced the acquisition of Seitlin, a Business Insurance top 100 broker, in November 2011 and also made several fold-in acquisitions to grow its middle market segment.
  • Private equity backed and privately held brokers - HUB International, USI Insurance Services, Ascension Insurance, and AssuredPartners provided competition to the publicly traded brokers in the acquisition arena as well.  HUB (owned by Apax Partners and Morgan Stanley Principal Investments) bought 33 agencies during 2011.  USI (owned by a Goldman Sachs' private equity fund) and Ascension Insurance (owned by Parthenon Capital and Century Capital) also bought several agencies during the year.  AssuredPartners (owned by GTCR) acquired a couple of top 100 brokers in Neace Lukens and Dawson.  AssuredPartners is a new entrant in the space having been formed by Jim Henderson and Tom Riley, former executives at Brown & Brown, during 2011.
  • Banks - Wells Fargo and BB&T have two of the largest bank-owned insurance brokers and were also active acquirers in 2011.  Wells Fargo acquired smaller insurance agencies to augment its operations.  BB&T ramped up its acquisition activity with the purchase of Crump's wholesale insurance business, having $300 million in annual revenue, and Precept, a top 100 broker.