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US insurance distribution M&A market slightly cooler in '16, study finds

Market conditions continue to support a wave of mergers and acquisitions in both distribution and insurance services in the U.S., according to an April 3 Conning Inc. study.

According to the study, the M&A market cooled marginally in 2016 from the previous year, but transaction volumes in the U.S. insurance distribution space were still above the five-year average.

Alan Dobbins, a director of insurance research at Conning, said that the consolidation of insurance distributors continued at a rapid pace through 2016 and into 2017, with M&A markets replacing organic growth for many companies in the insurance distribution sector.

Steve Webersen, head of insurance research at Conning, said in the release that there were 368 distribution-related transactions in the U.S., with insurance brokers and their private equity sponsors being the most active. Company valuations have risen alongside the consolidation, he noted. However, Webersen said, the market could find it hard to sustain those high multiples in the face of rising interest rates.