Acrisure has started to see increased evidence of capacity and pricing issues in different segments, from Californian residential wildfire exposure through to Property Catastrophe issues, said Grahame Millwater, President, Global Insurance at Acrisure in a recent interview with Insurance Advisory Partners.
Additionally, damages caused by Hurricane Ian hitting Florida and the Carolinas are adding more pressure to both of these issues, as well as rising interest rates and the slowing and uncertain economic environment which can also have a significant impact on insurance businesses.
Yet Millwater stays positive, he stated that in times of economic macro issues and pressures, insurance is generally very resilient, and he believes that next year will not be different for Acrisure insurance business.
He said: “We have to remain focused on our clients and helping them weather the economic storm. However, at times of economic risk (in fact of any risk) insurance remains critical. Obviously, if those businesses can’t survive then that can become a potential issue in terms of our own revenue, but past recessions generally show that impact to be relatively low.
“The period in which we had the most concern was in COVID when literally some activity just almost ceased (e.g., public/commercial transportation where we have a large presence). Even then the impact was not huge – we are such a heavily diversified group!”
When asked for his forecast for strategic consolidation, away from private equity led transactions, in the brokerage space in 2023, Millwater said he cannot see how some of Acrisure’s competitors, private equity or trade, can continue to sustain their pricing levels, especially with interest rates in their current path.
Regarding his views on current valuations for retail brokers and MGAs, he said: “Each year I say that these valuations can’t continue to trend upwards in the brokerage space, and each year they do! At Acrisure, we have been incredibly disciplined in a market where multiples have continued to increase, and even though we will make over 125 acquisitions this year, we will have looked at close to 1,000 potential targets.
“We have a huge advantage to other buyers, with 80% of our acquisitions having been referred from our prior acquisitions (or “Agency Partners” as we refer to them). This allows us to avoid many competitive “processes”, as well as what we believe to be a great reflection on how our Agency Partners feel about life within the Acrisure Group.”
