Brokers snap up smaller rivals and M&A activity will rise

US-based brokers will increase their buying of buy smaller firms to grow revenue, Reuters reports.

"I believe we will see an uptick in insurance broker M&A activity, as the market begins to harden," Dave Simmons, the insurance mergers and acquisitions leader at Deloitte, said.

"I think there is still room for consolidation within the brokerage industry, and we will continue to see roll offs of the small and medium regional broker firms into large national players," Simmons said.

Led by Marsh

The Marsh’s (MMC) aggressive strategy acted as a catalyst for other insurance brokers to follow suit, analyst Alan Devlin of Atlantic Capital said.

"The reason it (insurance broker M&As) picked up was because MMC came out with a specific strategy," he said.

  • MMC made six acquisitions in its risk and insurance services segment in 2009. It has already announced three deals this year, and completed a $218m buyout of HSBC Insurance Brokers.
  • Arthur J. Gallagher has announced five acquisitions.
  • Brown & Brown has announced six.
  • Aon, which made 14 acquisitions last year, has bought seven companies in the first quarter.
  • Willis Group was the only broker that grew in the first quarter without relying on acquisitions.