Today's Viewpoint: A MarshBerry Publication

Specialty Insurance Merger & Acquisition Activity Remains Strong in 2022

Despite a gloomy economic environment, specialty insurance brokers continue to be highly sought-after M&A targets due to their expertise in specialized and niche risks during a very volatile time.

Merger & acquisition (M&A) transactions involving specialty distributors as targets continue to be relatively robust year-to-date (YTD) through October 31, 2022, despite an environment of geopolitical conflict, continued inflation, and recession concerns. The total percentage of specialty deals YTD relative to the overall agency and brokerage market has increased to 26%, which compares to the historical range of 16-18%.

MarshBerry also expects that the total number of specialty deals in 2022 should approximate the total of 153 specialty transactions announced in 2021.

MarshBerry sees specialty firms continuing to command higher valuations and sees greater buyer demand as traditional brokers expand their business to include wholesale brokerage and delegated authority practices. This occurred in 2020 and 2021, as M&A deal activity showed that specialty insurance firm valuations increased, on average, valuation by 24%, according to MarshBerry data. This contrasts with retail firms increasing their average valuations by 9% during the same period.

Demand for specialty firms is increasing.

What is driving this greater demand for specialty firms? First and foremost, customers are looking for more than just a broker who can complete an insurance transaction. They are demanding a knowledgeable advisor who provides solutions in a more complex world. This has accelerated the need for consolidators to partner with firms offering capabilities that are typical in MGAs (Managing General Agents). Additionally, specialty firms have typically seen higher rate increases in 2022, even as overall insurance rate increases are moderating. This is because insureds are valuing the ability to place risk with a firm that has greater expertise around highly specialized or niche risks that may be harder to place with generalists.

Even with rising interest rates and rumors of tightening capital supply, buyers still appear poised for aggressive dealmaking, with many buyers having plenty of dry powder. While there is the risk of market conditions deteriorating more than expected, thus impacting the availability of capital (debt and equity) and the pace of transaction activity, there are greater tailwinds driving demand for specialty distributors.

Insurance M&A Market Update

As of October 31, 2022, there have been 118 announced M&A transactions in the U.S. involving specialty distributors as targets. The current volume of deal announcements represents a 9.2% decrease compared to this time last year, which compares to a decrease of 22.2% in all insurance distribution transactions. To be clear, while the pace of transactions is down year-over-year through October, there are deal submissions that continue to be recorded, which will likely close this gap and put it on pace for 2022 specialty transaction activity to approximate 2021’s results. On the other hand, retail broker transactions are expected to decrease in 2022 (compared to 2021). This trend illustrates a continued appetite for specialty distributors as more buyer types, including traditional retail brokers, expand into the wholesale and delegated authority space.

Similar to the retail space, private capital backed buyers accounted for the majority of transactions (72.0%) through October, remaining atop the various buyer classes. It is expected that this trend will remain consistent for the foreseeable future. Public brokers have remained consistent with last year in terms of total deal count, making up 7.6% of total announced transactions.

Additionally, there has been a 61.9% decrease in deals done by independent brokers compared to 2021. This can likely be attributed to historically high valuations outpricing brokers who do not have private capital backing and sufficient capital to bring to the table. 

Coming off an impressive 2021, which resulted in over 150 specialty transactions and represented roughly an 8% consolidation of specialty agents and brokers, 2022 continues this strong trend of deal activity through October. The top ten buyers of specialty firms accounted for 65.3% of all announced transactions observed.

Notable transactions in October and November:

  • October 3: Novatae Risk Group announced that it acquired Hawkeye Wholesale Insurance Services, Inc. (Hawkeye). Hawkeye is a managing general agent and wholesale broker based in Washington. The firm has a niche focus on underwriting policies for habitational, contractors’ liability, and lessors’ risk.
  • November 1: Novatae Risk Group acquired MarketScout Corp (MarketScout). Based in Dallas, TX, MarketScout is a platform MGA specializing in private client solutions, health care, fine art, and workers’ compensation.
  • November 2: Specialty Program Group announced its acquisition of Catapult Insurance Solutions, LLC (Catapult). Catapult is a privately held MGA and wholesale broker that provides residential homebuilders and contractors with insurance solutions for general liability, umbrella, builder’s risk, contractor’s equipment, and workers’ compensation. Catapult is also a Lloyd’s coverholder and has an infrastructure in place to accommodate program incubation and development.

If you have questions about Today’s ViewPoint or would like to learn more about recent activity in the specialty markets, please email or call George Bucur, Managing Director, at 440.392.6543.

Investment banking services offered through MarshBerry Capital, LLC, Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co., LLC. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122 (440.354.3230)

Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only.  Scorecard year-to-date totals may change from month to month should an acquirer notify MarshBerry or the public of a prior acquisition. 2022 statistics are preliminary and may change in future publications.  Please feel free to send any announcements to M&

Source: S&P Global Market Intelligence,,, and  other publicly available sources.

Contact George Bucur
If you have questions about Today's ViewPoint, or would like to learn more about how MarshBerry can help your firm determine its path forward, please email or call George Bucur, Managing Director & Specialty Practice, Co-Head, at 440.392.6543.

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