Buyers Still Want Life and Health Brokers: Stacy Kirshner

“Re-pricing has already started to take effect and has either paused or ended certain transactions,” Kirshner said.

In the long run, however, she expects rising interest rates to improve conditions for deals involving insurers.

Life and annuity issuers tend to benefit from increases in interest rates because they use huge portfolios of corporate bonds to support product benefits obligations.

2. Insurance distributors are in a different dealmaking environment.

Both private equity firms and corporate buyers view insurance brokerage deals as being “extremely attractive, because of the brokerage firms’ high margins, recurring revenue and free cash flow conversion,” Kirshner said.

“Life and health insurance brokers are well-positioned,” she said.

She sees strong interest in firms that serve aging baby boomers, and in those that have integrated with RIAs to capitalize on retirement services cross-sell opportunities.

Buyers, meanwhile, have more acquisition opportunities to consider, because “the volatility in the market has encouraged insurance brokerage sellers to engage with buyers.”

3. Insurance technology firms are still hot.

“Pricing will continue to remain high, particularly for assets that focus on digital technology through enhanced cybersecurity, comprehensive and integrated policy administrative systems, and systems to digitize and improve the customer experience,” Kirshner concluded.

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