M&A activity involving North American insurance brokers declined nearly 40% in the first quarter of the year compared to the last quarter of 2023, according to an S&P Global Market Intelligence analysis.

There were 103 deals with an aggregate value of $13.22 billion targeting insurance brokers during the first quarter, down from 168 deals and an aggregate value of $17.80 billion in the preceding quarter.

The decline comes amid a broader dealmaking downturn across all sectors in the region linked to high interest rates.

Truist leads the way

The largest deal announced in the quarter by some size was Truist Financial Corp.'s $12.6 billion sale of its insurance arm.

In February, Truist agreed to sell its remaining 80% stake in Truist Insurance Holdings LLC to an investor group led by private equity firms Stone Point Capital LLC, Clayton Dubilier & Rice LLC and Mubadala Investment Co. PJSC. The deal was completed earlier in May.

– In Play Today highlights potential mergers and acquisitions in the global insurance sector, while M&A Replay presents a summary of recently announced deals. – Discover the latest trends in insurance M&A across the Asia-Pacific region. – Access deep dives into insurance transactions across the globe via our Deal Profile feature.

Along with its size, the deal was notable because it was also a response to forthcoming heightened capital requirements for banks as surging insurance valuations continue to entice US banks to cash out.

Due to the sale, Truist will be able to strengthen its capital position and grow its core banking business, according to comments made by Truist CEO William Rogers Jr. during a first-quarter earnings call.

The largest insurance broker transaction in 2023 was Aon PLC's $13.63 billion deal to acquire NFP Corp.

Other deals

The second-largest broker deal of the quarter was F&G Annuities & Life Inc.'s much smaller purchase of Roar Joint Venture LLC for $359 million.

Two acquisitions by Arthur J. Gallagher & Co. were the third and fourth largest of the quarter, as the company continued to grow via a flurry of mergers.

CEO J. Patrick Gallagher highlighted the company's growth strategy during a March investor call, claiming there was tremendous opportunity to grow due to the fragmented nature of the broker industry.

"Most [broker firms] are still family-owned, have less than $25 million of annual revenues and adding them to our platform can create value for their clients and create clear opportunities for their employees," Gallagher said.