With life beginning to edge back towards some semblance of normality, it appears that M&A activity, which was on hold due to uncertainty in the market, is resuming. Below, I am going to look at what has gone through since the tap was turned back on in late June/early July. What is the outlook for the rest of the year? And one deal which could drag the total M&A figures up to the records, seen in 2018.
The names of the firms which have been active in the M&A market will come as no surprise to anyone who follows this closely. PIB have completed two deals in a matter of weeks, in regional brokers UK Insurance Net and Rigton Insurance. GRP, who themselves just had a majority investment from global private investment firm, Searchlight Capital Partners, have announced two deals through their group entity, The Country Group. Jensten Group, the owners of the Coversure franchise, have also announced two deals in quick succession and finally, the Ardonagh Group have announced the acquisition of Bravo Group, the PE owners of Broker Network, and Ethos Broking group, as well as, Arachas which is Ireland’s largest SME-focused insurance broker.
With these large consolidators continuing to hoover up regional brokers and, in some cases, even larger players in the market, what does the outlook look like for the rest of 2020? Well, according to their executives, the pace of deals won’t be slowed by the ongoing Coronavirus outbreak.
Ed Hannan, Group CFO of Jensten Group recently stated, “We continue to execute on our ambitious M&A strategy and we have a strong pipeline of future deals, in spite of the current economic environment; this reflects the ambition and reputation of our Group, management and shareholders.”
Towergate CEO, Joe Thewell, who spoke to Insurance Age about Towergate’s Q1 results, claimed “More brokers are keen to talk to us because of COVID. The market is hardening and the brokers are struggling to get placement. Brokers then want to sell to someone like Towergate because they want their clients looking after and because they know we can get placement.”
So, it seems the current trend of consolidation in the market will continue and may even gather more pace through the end of 2020.
There is one deal which looks to blow all the rest out of the water. AON’s merger with Willis Towers Watson, which according to Reuters.com would be “the insurance sector’s largest ever”, is valued at nearly $30bn and was voted through by shareholders of both firms on August 26th. The merger, which remains subject to regulatory approval, is expected to close in the first half of 2021 .
With all this change in the market, it can be difficult for agency management teams to keep on top of. RegTech solutions, like the REG Network, can help with automated data feeds, ensuring that best practises are followed in an ever-changing landscape.