Q1 Sees Lowest Insurance Agency M&A Activity in 5 Years; Will Mega Deals Follow?

The initial three months of 2025 witnessed the slowest quarter for insurance agency mergers and acquisitions in five years, as per OPTIS Partners, an investment banking and financial consulting firm. The total number of insurance agency mergers and acquisitions during the first quarter of 2025 saw a decline of 15% compared to the corresponding period in 2024. In Q1, there were a total of 141 reported insurance agency mergers and acquisitions, a decrease from 166 transactions in the same period last year.

The majority of the deals, about 139, involved U.S. agencies, while six transactions pertained to Canadian brokers. The first quarter of 2025 marked the ninth consecutive quarter below the long-term trend line. However, Steve Germundson, a partner at OPTIS Partners, expressed optimism about the pace picking up in 2025 due to the presence of numerous active buyers in the market. He did note that ongoing economic uncertainties might lead to a slight delay in the process. Timothy J. Cunningham, the managing partner at OPTIS, mentioned that several private equity-backed firms are preparing to enter the market or recapitalize. Furthermore, he anticipated more large privately owned agencies to be sold this year, citing the sale of Woodruff-Sawyer, a San Francisco-based agency with an estimated revenue of $268 million, as a sign of forthcoming mega-deals in 2025.

Gallagher, despite being involved in fewer deals recently, confirmed its agreement to acquire AssuredPartners for $13.45 billion in cash in December 2024. The deal, currently under review, is facing regulatory scrutiny that demands additional information. Gallagher aims to finalize the acquisition in the second half of 2025.

In the first quarter of 2025, private equity-backed/hybrid brokers continued to dominate deal activity, accounting for 73% of all transactions, as outlined by OPTIS. BroadStreet Partners led the pack with 18 deals, followed by World Insurance Associates (10) and Hub International (9). Privately held brokers carried out 25 acquisitions, while publicly held brokers reported 13 deals.

Overall, the outlook for insurance agency mergers and acquisitions seems promising, with the expectation of more mega-deals on the horizon. The industry remains active, especially with the presence of private equity firms and a line-up of potential buyers, setting the stage for potentially significant developments in the market landscape.