Despite the COVID pandemic ravaging the world, many aspects of the insurance industry continue to work despite the lockdowns. Mergers and acquisitions have seen continued growth in the field as many businesses seek to expand their sphere of influence. Private Equity continues to dominate M&A and despite a brief slowdown, M&A Activity continues to climb.
Several trends are emerging through this pandemic and lockdown.:
- High Volume: Despite the isolation, there are still many transactions. Through the end of August there’s already 649 Mergers & Acquisitions in 2020 which have exceeded the record of 643 set in 2018. There is a belief that the virus will push this number up as diversification continues.
- Private Equity Buyers: Many recent acquisitions have been made by private equity brokers. 66% of brokers were owned by such firms or some other capital investment firm. This is expected to continue in the future. They may have the money, but they don’t infrastructure and employees.
- Overall growth in the field: Mergers and Acquisitions are not limited to brokers. Since 2013 over $10 trillion have been spent in transactions across the industry. [1]
According to Mike Smith, President of Axis Insurance Services, LLC “We don’t really see any slowdown in the M&A activity. As a matter of fact despite the initial slow down at the beginning of the pandemic we believe that M&A activity will pick up. The reason is simple, the money is too good, and the hard market is making it difficult for traditional brokers to compete.”
Insurance coverages are an integral part of the acquisition process and due diligence and are often overlooked until the end when it’s too late to explore options. Agencies that are selling will have to purchase a tail policy for their professional and management liability coverages. Many times, you can purchase standalone policies much cheaper than from your current carrier. Given the amount of activity we encourage agents and brokers to contact us prior to the sale to review the proper transition of policies. Please find attached a document entitled
Managing Insurance Coverage During Mergers and Acquisitions
If you would like more information or would like to speak with one of our representatives, please contact Mike Smith
For Axis Insight into Mergers and Acquisitions and Tail Policies: https://www.axisins.com/products/tail-coverage-insurance/
[1] https://www.insurancejournal.com/news/international/2020/07/16/575693.htm
