Growing Through Product and Geographic Expansion

Larger firms in the insurance brokerage industry are diversifying their specialized offerings—becoming a mile wide and a mile deep. It’s the latest trend in an endless battle to compete and drive growth in this competitive M&A landscape, where both buyers and sellers are continually evolving their approach to growth.

Potential sellers can no longer rely on just one or two elements to attract potential buyers. They must show the quality of their growth to these businesses, measured through a litany of qualitative factors and quantitative metrics. It is no longer good enough to grow by simply adding revenue through M&A.

In order to create meaningful, sustainable growth, brokers are looking toward geographic expansion and broader diversification of their product offerings to clients. It goes beyond offering a wide range of services—they want to be experts in all verticals. For large firms, it’s quicker to acquire that expertise than it is to build it. So, there continues to be a convergence of demand for firms that specialize in employee benefits and consulting, payroll, high-net worth personal lines, and retirement and wealth management, or those that have a geographic dominance.

Evidence of this product diversification and geographic expansion trend can be seen in recent deals this year by larger firms, both public and private:

• In June, public broker Arthur J. Gallagher acquired Operations Inc, an HR consulting firm specializing in payroll, human resource information system services, talent acquisition, and employee training.
• In July, public broker Brown & Brown, one of the most active U.S.-based acquirers in the United Kingdom, agreed to acquire Quintes Holding B.V., which is among the largest independent insurance brokers in the Netherlands. This is Brown & Brown’s first acquisition in continental Europe.
• In September, independent financial services firm Alera Group essentially doubled its retirement and wealth management assets by acquiring Advanced Capital Group.
• In October, privately held Unison Risk Advisors expanded into the wholesale insurance space by acquiring its first non-retail business, Avondale Insurance Associates. Avondale is an MGU that specializes in excess and surplus lines underwriting management.
• In October, Gallagher also announced a deal to acquire Sydney, Australia-based Via Financial Group, which provides financial planning, wealth management, and life risk advisory services. This isn’t the first financial planning and wealth management acquisition for Gallagher, which made a big splash in 2022 with the purchase of f3 Companies.
• In November, public broker Aon announced it was acquiring U.K.-based Griffiths & Armour, an insurance broker specializing in professional indemnity and general insurance, furthering Aon’s expansion strategy in the United Kingdom and Ireland.

The insurance brokerage industry continues to evolve from just brokering insurance policies to providing comprehensive financial solutions. While the end clients’ needs are certainly driving that demand for a more holistic portfolio of product offerings, global expansion also appears to be a rising strategy for those larger firms to create sustainable growth.

M&A Market Update

As of Oct. 31, 2024, there were 574 announced M&A insurance brokerage transactions in the United States. Activity through October trended 5.7% higher than the 543 transactions announced through the same period of 2023.

Private capital-backed buyers accounted for 422 of the 574 transactions (73.5%) through October. Independent agencies were buyers in 96 deals, or 16.7% of the market. So far in 2024, bank buyers have completed five acquisitions. Deals involving specialty distributors as targets accounted for 87 transactions, or 15.2% of the total acquisitions to this point in 2024.

The top 10 buyers accounted for 50.7% of all announced transactions, while the top three (BroadStreet Partners, Inszone Insurance, and Hub International) accounted for 26.1% of the 574.

Notable Transactions

• October 7: AssuredPartners (AP), a prominent global insurance brokerage, acquired CoyleKiley Insurance Agency, a Rockford, Ill.-based brokerage specializing in property and casualty, employee benefits, personal lines, and life insurance solutions. CoyleKiley, which originated as the Varland Agency in 1955 and evolved through a partnership with R.M. Coyle in 1992, has been under its current leadership since 2015. Post-acquisition, Dana Kiley will continue leading CoyleKiley’s operations within AP’s Great Lakes Region, overseen by Regional President Mike Ross. This acquisition aligns with AP’s strategy to strengthen its regional presence and expand client offerings. MarshBerry served as advisor to CoyleKiley in the transaction.
• October 17: Unison Risk Advisors (URA) welcomed Avondale Insurance Associates as its newest partner. Avondale, founded in 2006, is URA’s fifth platform company. Avondale specializes in excess and surplus lines underwriting management, focusing exclusively on supporting wholesale distribution for the property and general liability insurance sectors. MarshBerry served as advisor to Avondale in the transaction.
• October 29: Arthur J. Gallagher (AJG) acquired Adept Benefits, a health and benefits consulting firm based in Snoqualmie, Wash. This strategic move aims to enhance AJG’s benefits consulting operations in the Pacific Northwest. Adept Benefits specializes in providing health and benefits consulting services to clients in the greater Seattle area. Following the acquisition, the Adept team will operate from its current location, reporting to Charlie Isaacs, head of AJG’s West region employee benefits consulting operations. MarshBerry served as advisor to Adept Benefits in the transaction.