Trade war won’t slow brokerage M&A, execs say

Tariffs will certainly impact everything from supply chains to product demand, but the effect on insurance brokerage M&A will be minimal, broker leaders tell Canadian Underwriter. 

“From a valuation perspective, at this point, we don’t think that tariffs are going to significantly move the needle or have a dramatic impact,” says Matt Mann, president of Westland Benefits. 

“Certainly, prolonged trade uncertainty could introduce some caution with investors, and….require investors to be more prudent as they’re going through the due diligence phase. But we believe this sector is incredibly stable,” he says. “We think there’s going to continue to be a tremendous amount of investor interest and, at this time, we don’t anticipate any material impact on the valuations.” 

In 2024, 82 P&C brokerage transactions were publicly announced — down from 116 in 2023. Twenty of those deals were announced in Q1, followed by 29 in Q2, advisory firm Smythe LLP said in its Canadian M&A Market Update.   

“We observed several shifts in acquirer and market sentiment against a backdrop of political uncertainty. Regardless, we feel the stage is set for continued consolidation in 2025, with acquisition multiples remaining elevated, albeit unevenly distributed across the brokerage spectrum,” the firm said in its February update.  

Tariff impacts

Service industries such as insurance aren’t subject to tariffs, which may shield brokerage acquirers from the direct effects of the trade war, says Mann. 

“We’re not a products and goods company. We’re providing services. So, in a lot of ways, we feel like we’re shielded from the direct impact of tariffs,” he adds. 

And tariffs will not be slowing down M&A strategy, experts tell CU.  

“It has no impact on our strategy,” says Mann. “Our strategy remains the same meaning we are going to continue to be highly acquisitive. 

“Westland has made a significant number of acquisitions across the entire portfolio the past couple of years, and we anticipate continuing to be highly acquisitive going forward, despite the fact that there’s so much talk about tariffs.” 

Tariffs won’t slow down Desjardins’ M&A strategy either, Guy Cormier, president and CEO of Desjardins Group says in a statement.  

“Our capacity for growth and our ambition for further acquisition opportunities will continue,” he says.  

“While tariffs present significant challenges, we are ready to respond and will incorporate this risk into our strategy.”  

The direct-to-consumer brokerage and insurer has a Tier 1 capital ratio of 22%, making it “one of the best capitalized financial institutions in North America,” Cormier says.  

“Our diversification provides us with the ability to absorb and withstand economic shock.” 

Indirect impacts 

Undoubtedly, tariffs will disrupt some commercial insurance clients in industries such as manufacturing, transportation and agriculture. 

“If brokerages have significant impact or exposure to those sectors, there could be some downstream or some indirect impacts,” Mann says.  

“If there are higher business costs for those clients, it’s going to put pressure on them from a profitability perspective and could lead to shifts in the coverages that they’re providing to their employees or other pricing pressures that would be common because of those tariffs.”