Look for more big brokerage M&A

The number of insurance brokerage mergers and acquisitions declined in 2024, but the past 15 months have seen a surge in high-value deals, as major publicly traded brokers announced multibillion-dollar purchases.

Targeting middle-market and specialty growth, the deals often involved acquiring brokers owned by private equity that were on the verge of entering the Top 10. Such brokers have themselves grown rapidly through acquisitions over the past 20 years.

The consolidation is unlikely to end anytime soon, brokers and analysts say. While organic revenue growth surged again last year, the moderating property/casualty market and the timing of various private-equity investments likely will fuel more big deals.

The world’s 10 largest brokers reported a combined $87.6 billion in brokerage revenue in 2024, a 13.6% increase compared with last year’s Top 10.

M&A

The three largest brokers announced significant acquisitions last year: Aon PLC bought NFP Corp. for $13 billion in April, Marsh LLC bought McGriff for $7.75 billion in November, and Arthur J. Gallagher & Co. announced in December that it plans to buy AssuredPartners Inc. for $13.45 billion, though that deal has been delayed because of a longer-than-expected antitrust review by the U.S. Justice Department.

Then, in June this year, seventh-ranked Brown & Brown Inc. announced it had agreed to pay $9.83 billion for the parent company of Accession Risk Management Group, which operates retailer Risk Strategies Co. and wholesaler One80 Intermediaries. The deal is expected to close in the third quarter.

Despite the large transactions, brokerage M&A fell in 2024 and in the first quarter of 2025, according to data from Optis Partners LLC. Last year, 750 deals were announced, compared with 833 in 2023, 1,031 in 2022 and 1,108 in 2021. In the first quarter of 2025, 141 deals were announced, down 15% from the same period last year.

The step up in large deals reflects the strong stock performance of publicly traded brokers, said John Wepler, chairman and CEO of Woodmere, Ohio-based mergers and acquisitions consultancy Marsh, Berry & Co. Inc.

“The public brokers are doing a victory lap because their currency wasn’t such that they could compete as well with the private-equity-funded brokers five years ago. Public brokers have traded up so dramatically, and their currency is so valuable, that they have a currency to be able to do accretive deals at market-clearing multiples,” Mr. Wepler said.

Some brokerages owned by private equity that previously acquired dozens of smaller rivals each year have markedly slowed their acquisitions as interest rates have risen and they digest previous deals.

But that is likely a temporary slowdown, several experts said.

“There will be more competition, probably from new private equity and those that know our business, that are reloading right,” said J. Patrick Gallagher, chairman and CEO of Arthur J. Gallagher & Co. “I also think that there’s a lot of those funds that are coming to a point in time where they want to cash out.”

The funding structure of private-equity deals often means the brokers are recapitalized or sold every five years or so.

“It’s still a pretty fragmented industry compared to any others, so the attractiveness of consolidation may come and go, depending on how cheap money is, levels of interest rates, economic conditions,” said Carl Hess, CEO of Willis Towers Watson PLC.

The changing property/casualty insurance market also may fuel M&A, said C. Gregory Peters, managing director-equity research at Raymond James & Associates Inc. in St. Petersburg, Florida.

“As organic revenue growth slows, I expect to see acquisitions, but the timing is subject to the whims of the sellers and the purchasers,” Mr. Peters said.

However, while the financial timeline of several private-equity-owned brokers may indicate a sale or recapitalization soon, they might choose to go public instead, he said.

But there remain many other smaller brokers.

“It’s still a very fragmented market. There are thousands and thousands of options out there, and we see opportunity,” said Greg Case, president and CEO of Aon.

Market conditions

Many large brokers reported strong 2024 organic revenue growth, which excludes the effects of M&A and foreign currency fluctuations, but some saw a slower growth rate in the first quarter of 2025.

Falling or moderating insurance pricing is likely affecting organic growth rates as corresponding commissions fall, experts say.

“Slow organic growth, slower GDP growth, that’s No. 1 in a slower, moderating P/C environment in terms of rate, that’s all going to slow down organic growth for brokers,” said Evelyn Ocas Salazar, assistant vice president at Moody’s Investor Service.

“I don’t see us as super exposed to GDP. It’s more cost of risk that drives growth for us,” said Martin South, president and CEO of Marsh LLC.

Prices are still increasing in some major lines, said J. Powell Brown, president and CEO of Brown & Brown Inc.

“The general market is flat to up mid-single digits. The exceptions on the up side would be certain classes of casualty, automobile and excess liability,” he said.

“People are looking at this by line, by loss cost. I think there’s discipline in the market, and where customers deserve decreases, they’re getting some,” Mr. Gallagher said.

Economic conditions also are affecting the market, said Marc Cohen, CEO of Hub International Ltd.

“We’re seeing the impact of tariffs, overall uncertainty and economic slowdown affect our business as pressure on organic growth. The brokerage business is GDP-sensitive, so what our clients are experiencing will impact us,” Mr. Cohen said.

The operating environment for brokers has changed over the past year, with declining or moderating rates and economic uncertainty, but it remains largely favorable, said J. Paul Newsome Jr., managing director at Piper Sandler & Co. in Minneapolis.

“It’s hard to say it’s bad; it’s just not as good as it was last year and the year before,” he said.

While prices are falling in some lines, “mega-trends” such as increased weather-related events and the implementation of generative artificial intelligence will increase volatility and demand for services, Mr. Case said.

“Our objective is to help clients manage through volatility and in doing so, if we have value, we’ll be fine,” he said.

The environment remains favorable for growth, Mr. Peters said.

“As long as the economy stays stable to growing, that’s a ripe environment for a broker to be very successful, and if the companies they work for provide them the tools necessary to help them win business, that’s all the more compelling,” he said.

While rates are falling, sometimes sharply in certain areas of the property market and other sectors, wholesale business is not returning to the retail brokerage market in significant volumes, Mr. Gallagher said.

“This time around, the excess and surplus markets seem to be holding their own and continuing to expand, and that is a new phenomenon,” he said.

Evolving catastrophe exposures, such as windstorms and flooding in North Carolina and convective storms in more regions of the country, are driving more policyholders to the E&S market, he said.

Shane Dilworth and Claire Wilkinson contributed to this report.