North American Insurance Agency M&A Activity Hits Seven-Year Low

The North American insurance agency market experienced a significant decline in M&A activity during the first half of 2026, recording only 292 transactions, marking a seven-year low. This 15% drop from 342 deals in the same period the previous year was reported by OPTIS Partners, an investment bank specializing in insurance mergers and acquisitions. The trailing 12-month total fell to 646 deals, the smallest number since Q1 2019, with Q2 2026 alone reporting a 25% decrease compared to the prior year.

This downward trend in insurance sector M&A activity has persisted over the past year. In 2025, the transaction count decreased by 12% from 787 in 2024, reflecting a third consecutive year without the traditional year-end surge in deal closures. The buyer landscape has also evolved with fewer active buyers, notably among private-equity and privately held entities, despite new investors entering the market.

Private-equity-backed buyers and hybrid buyers continue to dominate, constituting 75% of all deals over the past year and 80% of those closed in Q2 2026. Of the 68 unique buyers in the first half of 2026, 37 were backed by private equity, with six making their initial agency acquisitions. Meanwhile, 21 buyers were privately held entities, nine of which were new to the market.

Leading companies appear to be slowing down in this consolidation phase. Notably, Hub International's acquisition pace declined by 47% over the trailing 12 months. Keystone Agency Partners experienced a 29% drop, and BroadStreet Partners, although it remained the top buyer with 37 deals in the first half, reduced its acquisition rate by 16%. Acrisure, Patriot Growth Insurance Services, Alera Group, and HighStreet Partners also showed declines in activity.

Steve Germundson, a partner at OPTIS, described the situation as a "structural handoff" rather than merely a cooling market. While major buyers have pulled back, smaller and emerging private equity firms, as well as owners considering near-term recapitalization, have increased their activity. MarshBerry's 2026 M&A analysis points to heightened financing costs, integration fatigue from years of aggressive mergers, and a shift towards organic growth and operational excellence as driving factors. This has fostered a less competitive environment for strategic buyers with fresh capital.

Property and casualty agencies were the most active sellers, participating in 198 of the deals, comprising 68% of the total volume. Employee benefits agencies and combined P&C-and-benefits agencies contributed 31 and 25 deals, respectively, while remaining transactions included MGAs, TPAs, and life distributors, totaling 38 deals or 13%.

Significant deals during the first half of the year highlighted ongoing investment interests. Key transactions included Willis Towers Watson's acquisition of Newfront, Third Wave's acquisition of Palmer & Cay, and BayPine LP's purchase of Relation Insurance Services. Fresh minority investments were also made in IMA Financial Group by Oak Hill Capital and New Mountain Capital.

Tim Cunningham, managing partner at OPTIS, noted a bifurcation in valuations, with larger, well-managed firms maintaining higher figures while others experience declines. Strong organic growth and robust management continue to make agencies competitive, whereas agencies without these qualities are seeing decreasing exit multiples.

Germundson emphasized the importance of early strategic planning, citing demographic pressures as a major factor. The 2022 Agency Universe Study revealed that the average principal of a P&C agency is 54 years old, with 17% aged 66 or older. The 2024 edition found that one-third of agencies anticipate a change in ownership within five years. Despite the expected wave of retirements, many agencies still lack formal succession plans.

These factors underline an evolving market where established agencies with clear growth and management strategies continue to attract buyers. Owners are encouraged to begin long-term preparation, ensuring solid management and operational infrastructure to retain value and appeal to acquirers in an increasingly selective buyer market. This shift indicates a maturation phase of agency M&A, where careful planning and execution are paramount for ongoing success.