Deals that Shaped Brokerage M&A
Private equity has become a key player in the mergers and acquisitions landscape. Sica Fletcher explains the deals that brought us here.
Over the last two decades, private equity (PE) investment has transformed the insurance brokerage industry.
In 2007, PE-sponsored insurance brokers represented less than 10% of all brokerage mergers and acquisitions (M&A). In 2024, they accounted for approximately 87% of total deal volume.
In 2007, a handful of public insurance brokers and banks dominated the buy side, including Bank of America, Wells Fargo, BB&T, Northeast Bancorp, and Wachovia. Now there are over 50 insurance broker acquirers, the vast majority of which are sponsored by private equity capital.
A handful of deals drove this change—and they began with an innovation in the leveraged buyout (LBO) model.
The Advent of Broker LBO
Leveraged buyouts are a primary investment strategy of private equity. In a leveraged buyout, a private equity firm uses a significant amount of borrowed funds (leverage) to finance the purchase of a company. This borrowed capital is secured by the assets of the business being acquired.
The historic problem for LBOs in the insurance space is that brokerages have no real assets to use as collateral to lend against.
The breakthrough to this dilemma came in 2007 when two large PE funds, Goldman Sachs Capital and Apax Partners, separately convinced lenders that insurance brokers’ cash flows are a solid collateral to lend against. In the first transaction, Goldman Sachs Capital took publicly traded USI private in an LBO worth $1.4 billion. A few months later, Apax Partners took publicly traded Hub private in a $1.8 billion deal.
For lenders, the test case of lending to insurance brokers with no real assets in a challenging environment proved lucrative. USI reportedly generated 2.5x returns, and Hub 3.5x returns, over the five years after each LBO.
Bet Big, Win Big
The momentum continued with another deal in January 2008. Genstar Capital teamed with longtime industry executive John Addeo to invest roughly $60 million in a new firm called Confie Seguros, which focused on personal lines coverage in auto, home, and other markets. This was in the thick of the financial crisis, at a time when buyers weren’t interested in non-standard auto agencies as an asset class.
The deal was led by Ryan Clark at Genstar, who would become, arguably, one of the most successful insurance broker investors. He smartly partnered with Addeo, who might be considered the godfather of broker M&A. Addeo founded Alliant and went on to start USI. His track record brought significant credibility to the deal, after which he served as Confie Seguros’ first CEO.
In 2012, Genstar sold Confie to Abry Partners (another PE firm that continues to play a major role in this market) for about $600 million. After paying lenders, Genstar reportedly earned roughly $360 million from its $60 million investment.
PE Goes All In
The success of the USI, Hub, and Confie Seguros deals attracted real private-equity interest, and the next deals solidified brokerage M&A as a key plank in PE investment strategy.
In 2010, GCP Capital Partners invested $20 million in Acrisure. Acrisure’s strategy was to make owners who sold their businesses feel like true partners by offering them equity in the company. Instead of focusing on cutting expenses or eliminating jobs, Acrisure encouraged these former owners to continue managing and growing their businesses under a new corporate umbrella.
Many business owners looking to sell loved this approach. By 2013, Acrisure had closed several acquisitions and had grown to $35 million of annual revenue, leading the company to recapitalize in a deal valued at around $90 million. The new investor was Genstar. In 2016, Genstar exited its position in a management buyout and generated a reported 8x return on the initial investment.
In 2011, Brown & Brown executives Jim Henderson, Tom Riley, and Paul Vredenburg left the firm and formed AssuredPartners with the backing of PE firm GTCR.
Assured grew dramatically through acquisitions and recapitalized in 2019. GTCR exited and Apax Partners (the firm that took Hub private in 2007) stepped in. Upon exit from the Assured investment, GTCR reported returns of capital in excess of 3x.
The success of these transactions attracted huge amounts of PE capital to the insurance brokerage space, led to the formation of many new PE-sponsored brokers, dramatically increased both transaction volume and multiples paid for insurance brokers, and propelled steady consolidation in the industry.
For the full article, visit: https://www.sicafletcher.com/2025-six-industry-changing-deals.
