Originally published in Mergermarket on September 12, 2024
The recent Mergermarket overview highlights ongoing trends in the North American insurance sector during the last two quarters, emphasizing that M&A activity is primarily driven by the distribution market where brokerages remain attractive acquisition targets despite commanding higher valuations. Hear from A&M's Stacy Kirshner as she discusses the current environment of M&A in the insurance sector.
"Financial sponsors continue to back consolidation platforms, drawn to the sector's strong cashflows, sticky clientele and 'minimal capital requirements' to run the businesses. Private equity sees this as a safe environment to get into and make returns," notes Stacy Kirshner.
"In property and casualty insurance, premium rates needed to cover escalating losses have pushed up sales commissions for insurance agents, adding tailwinds for organic expansion. Brokerages have also grown value through diversification, bringing in new revenue streams from lines such as third-party administration (TPA) and advisory services. Some have added retirement and wealth management services to their offerings."
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