Mergers and acquisitions of and among managing general agencies (MGAs) have been increasing in number and size since last year. Carriers and private equity have long been active, and that participation has accelerated, especially as U.S. firms have extended their reach internationally.
A quest for market share is mostly driving M&A in MGAs. Acquirers seek economies of scale and technology. If they have a tech advantage, they’re seeking new markets in which to apply it.
Accelerating M&A has raised concerns that insureds could shoulder some of the cost through higher premiums, but Robert Kimmel, CEO of K2 Insurance Services, said, “You have to charge the same premium, or even less. The customer has to benefit in any case. It is the shareholders of the acquiring company, or the limited partners in the case of private equity, that are ‘paying,’ but in the sense of having to live with lower returns.”
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