In the dog-eat-dog world of insurance brokerage M&A, bite-sized companies formerly seen as targets are joining the feeding frenzy to ink mergers of their own. That’s created a massive dealmaking opportunity, and it’s only one pocket driving energy in the sector. “Now we’re seeing the companies we’d previously see as acquisition targets for the large ones being acquirers themselves,” says Grant Thornton managing director Andrée Bourgon, who joins us to talk about prospective deals across life and property and casualty as well.
Growth in M&A from mid-sized players is a welcome development in the insurance brokerage space, as regulatory pressure caused last year’s behemoth sale of Willis Towers Watson to Aon for a proposed $30 billion to fall apart. Brokerage deals nevertheless led the sector’s $34.2 billion in deal value last year, according to a PwC analysis.
“I think in the property and casualty side, what we’re seeing is focused acquisitions,” says Bourgon. “I’m not talking huge transformational deals.”
Farmers Group’s $4 billion acquisition of MetLife’s US P&C unit, for instance, got the acquirers access to new products and markets. The deal closed last April.
Similarly in life insurance, businesses are concentrating on a few core strategies or markets, and are prepared to divest in order to streamline their profile.
“We’ve seen quite a few life blocks come to market that are non-core for those businesses,” says Bourgon.
It’s welcome news for a private equity industry eager to snap up pools of capital. Life insurers facing a slow rebound off low interest rates could remain interested sellers.
Annuity and other life insurance product providers are a go-to source for permanent capital among large, publicly traded financial sponsors. Apollo Global Management’s Athene and KKR’s Global Atlantic already provide captive pools of permanent capital.
Across brokerage, life, and P&C, there are many more meals ahead for deal-hungry industry players.
