Specialty M&A Market Continues to Thrive

Video Transcription

Hello. My name is George Bucur and I’m a director of the MarshBerry’s financial advisory practice. Catering to serving specialty distributors such as MGAs (managing general agent), MGUs (managing general underwriter), wholesale brokers and program managers, we’re here to present an update on the dynamic marketplace that we are seeing in specialty distribution.

Specifically, MarshBerry estimates 100 billion of premium will be placed through specialty distributors in the P&C (property and casualty) marketplace in 2021. This would have comprised around 13% of the P&C market. If you compare this to just a decade ago, specialty distributors made up less than 9% of the marketplace. This represents a 44% increase in the overall market. Now there’s many factors driving this, but the rate appreciation is one of the biggest factors pushing that 100 billion up.

We talked previously about how some in the marketplace are getting more and more interested in specialty distribution. Whether it’s AM Best through the Delegated Underwriting Authority Enterprises, the “DUAE” initiative that they are pushing, or whether it is buyers in the marketplace, and the attraction that they have because of the organic potential that specialty distributors represent oftentimes exceeded that of the admitted marketplace. Specifically, when we talk about buyers, we’ve seen 83 transactions in 2021 through July. MarshBerry estimates there will be around 180 transactions announced in 2021, which represents an acceleration of transaction activity. With this activity, we see it primarily being driven by private equity once again, similar to 2020. Specifically, a lot of that is being driven by one firm, Integrity Marketing Group, who had 19 of those transactions.

We expect the rest of this year to be a very hot environment from a M&A (Mergers and Acquisitions) perspective. Valuations are holding strong even with the influx of supply. There is just an insatiable amount of demand out there that continues to drive the overall M&A marketplace. If you have any questions in terms of how this dynamic marketplace may impact your operations, please do not hesitate to reach out. Until next time, be well.