Insurance Mergers: Changing the Commercial Market
Experts emphasize that it is a seller’s market for insurance brokers as the commercial insurance sector has steadily increased over the past year. As we approach a soft property insurance market, companies are gearing up for growth in Insurance Mergers & Acquisitions.
Merger and acquisition growth doesn’t seem to be slowing down any time soon. For example, Willis Group Holdings P.L.C. and Towers Watson & Co. released plans to merge in an $18 billion deal. While these mergers are common and occur daily nationwide, the 10 largest brokerages sustained a progressive growth for 2014 as a result of these acquisitions. Collectively, their profits increased by 6.5% which totaled $41.1 billion according to an annual Business Insurance survey.
Arthur J. Gallagher & Co. held the largest increase with a 28.7% jump from last year. Their success is attributed to an aggressive acquisition strategy, including a $938 million deal in which they acquired Australia’s Wesfarmers Ltd.
Phil Trem, Vice President of Marsh, Berry & Co. Inc. unveiled that they already have 148 deals lined up within the first five months of the year- the highest number on record since mergers and acquisitions began to be tracked in 2005. He stressed the circumstances of the ideal market by saying “It’s absolutely a seller’s market. Firms that never thought about selling are testing the waters.”
Low interest rates which limit profits are attributed to the rapid increase of mergers and acquisitions. What’s more, a healthy economic growth in Western Europe is contributing to relieving pressure on rates for international brokerages.
At PL Risk, we understand the inevitable fluctuation of the insurance market and its effects on brokerage profits. We stay current on industry trends and aim to protect your clients’ agencies from a variety of risk exposures. For more information on our offerings and services, contact us today at (855) 403-5982.
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