Expect to see more regional insurance offices hit the auction block, says Doug Hammond, chairman and CEO of National Financial Partners Corp. (NFP).

"A lot of them were not considering a sale, but now they're poking their heads up and we're seeing an increase in opportunity," Hammond tells Mergers & Acquisitions.

New York-based NFP-a provider of employee benefits, insurance and wealth management, advisory and brokerage services-hopes to snatch up smaller players, namely those in the property and casualty (P&C) space.

Hammond stepped into his chairman role in July, taking over for Jessica Bibliowicz, who was best known for expanding NFP by purchasing a slew of smaller financial firms. Hammond played an integral role in several of those transformational initiatives and M&A strategy, including the process that resulted in the $1.3 billion deal by private equity firm Madison Dearborn Partners to take NFP private. He also served as outside legal counsel to Apollo Global Management LLC (NYSE: APO), NFP's original $125 million capital sponsor, in forming the company. Since becoming president in April 2012, he has led NFP to buy 16 companies, including eight since becoming CEO in May 2013.

With backing from Chicago-based Madison Dearborn, NFP is poised for growth, he explains - both organically and through acquisitions.

Insurance advisory firm MarshBerry reported a 35 percent decrease in dealmaking across the insurance sector in 2013, which totaled 213 deals, compared to the same timeframe in 2012, with 325 deals. Still, Hammond feels that one particular niche of the middle market has NFP and its rivals excited. For 2014, Hammond is paying close attention to P&C, or insurance that protects against property losses to businesses, homes, cars and damage to the property of others.

Why is "property and casualty" ripe for M&A?

A lot of the folks who have owned smaller to mid-sized operations are now operating in a more complex and competitive environment. So, the larger brokers are coming down to the middle market where regional offices dominated, and they're entering that space with a lot of risk management consulting and benchmarking-all those tools that require you to be competitive. Since they're currently looking downstream, a lot of these mom-and-pop firms are thinking of selling. Because of how robust the M&A market has been, they want to at least have a conversation and you might be able to compete for an acquisition that otherwise might not occur.

How is the sector viewed by private equity firms?

Insurance companies are very appealing to the private equity market because of high cash flow and high cash conversion rates. There were a number of big PE deals, like the one we did with Madison Dearborn. Hub International Ltd. went to Hellman & Friedman for $4.4 billion. Then there was the USI deal where Onex Corporation of Canada agreed to buy the insurance brokerage firm from a Goldman Sachs private equity fund for $2.3 billion.

Who are your major competitors?

We see both the same firms we've always seen as well as some new players. Some of the banks that are active buyers include BB&T Corp. (NYSE: BBT) and Wells Fargo & Co. (NYSE: WFC), but more often we run into other middle-market players such as USI Insurance, Arthur J. Gallagher & Co. and HUB. We also see some activity from private equity consolidators like GTCR's Assured Partners Inc. Then there's Marsh Inc., a subsidiary of Marsh & McLennan Companies Inc. (NYSE: MMC). So far, it's a competitive landscape and for us that's good because it gives us more opportunity to play. Out of all those players, we got the best deal in town. P&C is a relatively new venture for us, but we have a pretty robust pipeline of potential targets that we're scouting. What will probably slow down are the large transactions because big players like NFP, HUB International and USI have all traded this year. So the big players held by PE that were ripe to go private--those have occurred. Now you're looking at more bread-and-butter transactions, the regional players that are available, and the landscape of potential deals nationwide is gigantic.

With total deal volume in the sector down in 2013, are there other M&A opportunities?

There was a bit of perception that 2013 would be a big year in M&A in terms of size, but not as big of a deal year in terms of volume of transactions. For insurance broker deals, you actually had 224 between January and October in 2012 and just 153 during the same timeframe in 2013.That's a function of coming off of several years where there was a super high number of closed deals and less on the market. Still, I think it's a highly fragmented business and we were one of the few consolidators of employee benefits firms. The P&C sector is still highly fragmented. The industry lends itself to that. When you look at the health care reform landscape and all the changes associated with that, along with the actuary tools that are needed, a lot more is required infrastructure-wise than the smaller players are able to deliver. Pre-2010, it was a spreadsheeting business of which underwriters could offer the best deals. Now, given the complexity of voluntary and ancillary benefits, as well as the impact of the Affordable Care Act, it's an environment that changes so often. Keeping on top of it requires a much larger infrastructure to serve the clients.

How has NFP evolved under your leadership?

We've been transitioning our business model from how we were in 2008 and 2009 to a more structured business. We had been doing deals that were a bit unique in the industry. We were buying discreet operations and leaving the business, for the most part, alone or as independent operating units. In the wake of the financial crisis, however, we reorganized under three segments: the corporate client group, the individual client group and advisor services group. The largest today is our corporate client group. So, we moved away from a decentralizing operating environment, and we consolidated the businesses that operate more consistently, similar to Arthur J. Gallagher, USI and Brown & Brown Insurance.

What are some of NFP's goals?

There is tremendous opportunity for us. In the employee benefits space we have a huge portfolio of businesses that use our services that we don't own outright. We're now looking at the businesses in that space, but our primary goal is to build up our P&C business. To focus on P&C, we first look at where we need to be opportunistic and focus where we have our biggest employee benefits businesses, and that's throughout the NY metro area, Boston, Chicago, Southeast, Southwest, Pacific Northwest and Southern California. Buying up P&C brokerage firms can also complement our employee benefits block. We're currently operating in the P&C space and so far we've tripled the size of that business from 2010. It used to be small, but now we have roughly $80 million in revenue. We'd eventually like to build P&C to about $350 million in revenue and balance out the $450 million we get from the benefits business. We serve roughly 50,000 corporate clients and we're barely touching the P&C side.