THE HALES REPORT. Valuation Multiples Today - Not Your Father s Pro Forma INSIDE THIS ISSUE

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1 THE HALES REPORT 1185 Avenue of the Americas, 32 nd Floor, New York, NY, Issue # 2, Vol: I May 8, 2017 INSIDE THIS ISSUE Valuation Multiples This Is Not Your Father s Pro Forma 1 State Farm Setting Stage For Multi-Channel? Looks Likely 4 Friction In The Value Chain Broker vs. Underwriter 7 Early Read On 2017 Organic Growth: Stable At ~3-4% 11 Hales Hits 13 Deal Diary 15 Public Broker Valuations 17 Valuation Multiples Today - Not Your Father s Pro Forma Valuation multiples are in the eye of the beholder. An intermediary seller and each of its prospective buyers could calculate a different multiple for the same acquisition/price/deal. That said, in this highly competitive sellers market, buyers have typically become both much more prospective looking rather than retrospective and more aggressive with the allowable adjustments. For example, instead of taking trailing financials and adjusting for unusual items, buyers are much more willing to take a forward view of financials on a pro forma basis (i.e. adding in new producers that have yet to build their books, estimates for new employee benefits enrollments, etc). This is not your father s pro forma! There is also a distinction to be made between guaranteed up front multiples, currently ~7-9x EBITDA on average, and all in multiples inclusive of earn outs, which can often exceed 10x. Comparing the two figures is apples and oranges and allows both sides of the transaction their own view. Exhibit 1 The Hales Report Contact: Feedback@TheHalesReport.com Page 1

2 Acquisitive Middle Market broker AJ Gallagher has begun to consistently disclose the EBITDA multiples paid (their definition) for acquisitions on a quarterly basis [see Exhibit 1]. While the broker admits pricing so far in 2017 has moved higher, at ~8x EBITDA in 1Q17 rather than x in 2016, the multiple still seems low to us. These multiples appear in stark contrast to peer Brown & Brown which discusses a market where many available deals are approaching or exceeding 10x EBITDA (their definition) and no longer meet their return hurdles (B&B has announced no deals so far in 2017). Some of the acquisitions that we see out there, we know that the numbers don't make sense; but we're a forever company and those [PE-Backed] companies are going to be flipped in 3 to 5 to 7 years and they don't build cultures in that period of time. - Brown & Brown CEO Powell Brown, April 2017 In addition to the apples and oranges issue, we believe the answer is somewhere between the 2 public Middle Market brokers. Brown & Brown has struggled to attract acquisition targets in recent years (strict expense culture has been a consideration for sellers); irrational pricing is an easy scapegoat. At the same time, x EBITDA sounds like a meaningful discount to the current market average (even at the low end excluding earn-outs). That said, we appreciate the figures can be influenced by size and type of deal (i.e. P&C vs. benefits). There were a couple of specialty shops that commanded a slightly higher multiple this quarter [1Q17]. But as I look at our pipeline, I see this [multiple] coming in for the year below 8x. - AJ Gallagher CEO Pat Gallagher, April 2017 The Hales Report Contact: Feedback@TheHalesReport.com Page 2

3 Other Recent M&A Commentary: While competition from Private Equity (PE) is clearly a negative for the incumbent strategic buyers, both AJ Gallagher and Marsh & McLennan recently remarked that their M&A targets typically do not fit the private equity model. Marsh & McLennan (4 deals in Q1:17) We generally don't compete with private equity because in our build of Marsh & McLennan agency, the focus is building the highest quality agency in the United States and attract like-minded individuals who have the same dream in their minds, as opposed to some companies that are looking to just optimize their cash payout The one thing you know about private equity, they re not permanent capital. We're in the business to stay. And so, generally, if we're talking to a company in the agency space, and they have not decided whether they want to go with us or private equity, well it's not a company for us. A.J. Gallagher (12 deals in Q1:17) Those [targets] that we're actually courting and those that are actually merging with us have decided that they want to be with a strategic. They want our capabilities. They want our resources. They don't want to be part of a roll-up So yes, there's price competition out there But by and large, we're looking for those partners that want to take a fair price to come sell insurance together with us. The Hales Report Contact: Feedback@TheHalesReport.com Page 3

4 State Farm, #1 U.S. Auto Insurer: Setting Stage To Go Multi-Channel With Distribution? Sure Looks Clear To Us. Captive Agent Powerhouse Plans To Operate A New Direct Platform In Rhode Island (No Agent Presence Currently). There were several noteworthy announcements / developments from State Farm last week: (i) The filing to authorize a new insurer in Rhode Island, HiRoad Assurance Company, to test over the next 12-18mos advanced insurance technologies and concepts in a state where they do not have agents. It is disrupting ourselves in a way that helps us grow so that we can in turn disrupt the industry. (ii) (iii) The disclosure that BlueOwl LLC, a separate tech start up building technology, data, & product solutions, has been established and will be used by HiRoad. Plans to consolidate facilities was announced. State Farm will exit 11 over the course of the next several years ( ) affecting ~4,200 employees or ~6% of its nearly 70,000 workforce. In order to adapt to the changing needs of our customers and continue to provide the remarkable service that our customers expect, we must continue to manage our business efficiently. In our view, the moves are further confirmation that substantial change is coming to the (re)insurance industry in general and the wheels business specifically. State Farm recognizes new / expanded distribution and more efficient operations will be necessary to compete in the future. While the implications for industry-wide personal auto volume amidst autonomous driving features is obvious / negative (and >60% of State Farm business is personal auto business), it s also interesting to consider that Warren Buffett s GEICO has its eye on the top market share spot (targeted by the time Mr. Buffett, age 86, turns 100). At the current growth trajectories of each company, this could happen within 10 years. State Farm must adapt. The Hales Report Contact: Feedback@TheHalesReport.com Page 4

5 As shown in Exhibit 2, GEICO specifically and direct writers broadly have been gaining share in the personal auto marketplace consistently over the last 10+ years. State Farm, by contrast, has held steady with ~ 19% share. Exhibit 2 100% 5.6% 90% 11.9% 11.5% 80% 16.2% 70% 60% 51.1% 50% 43.7% 40% 30% 20% 10% 31.4% 28.6% 0% Source: Statutory Filings U.S. Personal Auto Direct Premium Mix By Channel GEICO Direct ex GEICO Captive Agency HiRoad will be a digital direct writer, initially writing auto, but potentially expanding to other lines later. While there is no current channel conflict in RI, the launch clearly raises questions about State Farm s longer term distribution strategy. FYI, State Farm is the #8 CMP writer in the U.S. with a 4% market share (we view CMP as a proxy for small commercial). We have no question that to compete long-term State Farm, like other captive and independent agent based insurers, will have to offer product via multiple distribution channels. Progressive has shown the way and the industry will ultimately follow. State Farm will use HiRoad to explore ways to improve customer experience, reduce costs and accelerate delivery with technology that does not rely upon legacy State Farm s systems, including automated policy issuance, consumer self-service models, better data / analytics, and telematics. The firm will experiment specifically with brand positioning to appeal to the growing number of customers who expect most of their contact with the company to be via mobile or online rather than through an agent. See State Farm s letter to agents on the following page. The Hales Report Contact: Feedback@TheHalesReport.com Page 5

6 State Farm s letter to agents: Today, State Farm Mutual Automobile Insurance Company is filing to authorize a new insurance company in Rhode Island where we do not currently have State Farm agents for the purpose of testing advanced insurance and technology concepts. The new company, HiRoad Assurance Company, is a digital direct writer initially writing auto insurance with the potential to later add other lines of insurance. Customers expectations are changing based on their experiences with other companies. This test will help us become better as we learn how to accelerate the delivery of new approaches and technology that could be utilized by HiRoad and by State Farm and State Farm agents, employees and customers. It is disrupting ourselves in a way that helps us grow so that we can in turn disrupt the industry. Additional details Through the next months, HiRoad will test: A high degree of automation that may speed policy issuance and reduce costs A primarily self-service model that empowers customers to help themselves and that may reduce operational costs High-end analytics, known as data science, to help streamline processes and improve the customer experience New ways to make telematics a more appealing concept to consumers Technology, data and product solutions that do not rely on State Farm legacy systems or business processes Brand positioning that appeals to tech-savvy customers who expect primarily mobile and online interactions A separate company, BlueOwl, LLC, was established as a tech start-up and is building the technology, data and product solutions that will be used by HiRoad. You may recall hearing about BlueOwl in the March edition of Inside the Neighborhood. Both HiRoad and BlueOwl are wholly owned subsidiaries of State Farm. Source: State Farm The Hales Report Contact: Feedback@TheHalesReport.com Page 6

7 Friction In The Value Chain Broker Vs. Underwriter On Compensation Trends. Soft Market Highlight the Friction. Intermediary compensation trends and yield strategies have long been a contentious topic between brokers and underwriters. The issue has again come to the forefront, with recent public communications between high profile CEOs in the (re)insurance industry. Chubb CEO Evan Greenberg used his annual letter to shareholders as a platform to criticize the abusive behavior on the part of some brokers, most specifically in the wholesale markets where business is increasingly being facilitized. Marsh Mac s CEO Dan Glaser s used his prepared remarks to investors on the broker s recent Q1 conference call to acknowledge the inevitable friction along the (re)insurance value chain, and to defend brokers role/strategies and recent compensation trends as in the best interest of clients. Underwriter (Chubb): Another sign of a soft insurance market is the abusive behavior on the part of some brokers who enrich themselves at the expense of both their customers & underwriters. Cloaked in the mantra of customer best interest or treating customers fairly, they seek the cheapest price and broadest coverage at commission terms that by any measure are excessive. Forcing underwriters to succumb to the lowest common denominator is hardly in the customer s, or industry s, best interest. These predatory behaviors, which have shown up around the world, and in London in particular, are simply unsustainable from an underwriting perspective and will come back to haunt these brokers: there will be customer and regulator backlash, or worse. Remember, distribution can be disintermediated. Chubb CEO Evan Greenberg, 2017 Shareholder Letter Broker (Marsh Mac): As a broker, we do not work for the carrier. We work for the client. Our goal is to deliver broad coverage at competitive terms, and press the industry to meet rising client expectations for service and coverage. Both trusted advisers and carriers can be commoditized and disintermediated if they become complacent. We all have to prove ourselves everyday by innovating and creating value. Client demand for a better user experience will only rise over time. The brokerage industry is at the front of the value chain and nobody is better positioned than Marsh & McLennan to deliver greater innovation and service for clients. Marsh & McLennan CEO Dan Glaser, 1Q17 Conference Call The Hales Report Contact: Feedback@TheHalesReport.com Page 7

8 Additional commentary of interest: More from Evan Greenberg: Compensation: Price goes down, compensation goes up. What's the logic of that? And frankly, in this world today, a digital world where there is greater efficiency and greater transparency, what industry or business do we know about where prices are going down but intermediary percentage of the dollar of what's being placed goes up? And that's what's occurring in the facilitization of the business. I don't think it's advisable. I don't think it's in the long-term interest or even the medium-term interest of our business, of our industry. I don't think it's sustainable. And I say it because I care about the industry. And I think like every other industry, those who are knowledgeable of markets, who are knowledgeable of how to use technology in markets, they will notice this, and change will come, without a doubt, in my mind. Facilities: It's [facilitization] spoken of as efficiency. But volume is used to attract underwriters, who no one comes with clean hands who for the sake of volume will do things to pricing and terms and conditions that aren't that prudent, that aren't sustainable and that they otherwise wouldn't do when it's one-off risk placed More from Dan Glaser: Compensation: We get paid in a variety of ways for the value we create. Regardless of whether we are paid by fees, commissions or some other methods, it is important that our compensation is fair and transparent, and we believe it is. Broker compensation levels in an aggregate have been remarkably stable over time. Looking in the U.S. property and casualty data from A.M. Best, commissions as a percent of premium have held steady in the 10% to 12% range for the last 3 decades. This is consistent with our recent results. For full year 2016, Marsh placed roughly $55B of premium and generated revenues of $6B, for a yield of approximately 11%, which has been relatively stable over the past several years. Carrier Relationships With change in the industry, there will be friction across the value chain at times. However, our bond and relationship with carriers is strong. We expect both intermediaries and carriers will be continually challenged to differentiate and add value. These are exciting times, and we believe we are as well-positioned as any firm to continue to thrive. The Hales Report Contact: Feedback@TheHalesReport.com Page 8

9 Commission Trends in U.S. Statutory Data: Marsh Mac pointed to U.S. statutory data to portray that, over the past 3 decades, commission trends have been relatively stable at between 10-12% of U.S. industry premium. Exhibit 3 shows the U.S. statutory data in question, but we emphasize it does not tell the whole story and in our view understates commission yield trends (based upon premium) given the statistics fail to capture (i) fees paid directly by clients to brokers and (ii) the substantial rise in acquisition costs in international wholesale markets such as London (the Lloyd s acquisition ratio is up 5pts in 10 years for example). Still, the commission & brokerage trends per A.M. Best Aggregates & Averages are shown below, showing personal lines and commercial lines separate from the total. While in line with longer term averages, we see the C&B ratio in commercial is up ~1pt from the mid-2000 lows of ~ 10% (impacted by Spitzer s crusade against contingent commissions). Exhibit 3 U.S. Industry Commission & Brokerage Ratios 12.5% 12.0% 11.5% 11.0% 11.7% Personal Lines Commercial Lines Total Industry 10.3% 11.2% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Source: AM Best Aggregates & Averages We believe the property/casualty industry-wide aggregate expense base is too high and unsustainable long term when only $0.56 of every $1.00 of premium is returned to the commercial customer in terms of loss payments. Last year, our colleagues at Dowling & Partners hypothesized that over the long-term the industry would have to find a way to return closer to $0.75 or risk being disrupted from outside the industry. The Hales Report Contact: Feedback@TheHalesReport.com Page 9

10 If each of the 3 major expense components were reduced by ~ 3-5 points over time the 75% hurdle could be achieved. Specifically: (i) loss adjustment expense, (ii) commission & brokerage and (iii) G&A/other. With commissions to intermediaries jumping off the page as the largest single expense (again, understated), it is no surprise this area gets so much attention by carriers (they should look in the mirror). Compensation will decline with time, due both to technological changes and more direct business. We have been hearing about the death of the agent for more than 40 years. It s not going to happen. The efficient intermediary of the future who can add value to its customers will continue to justify its position (at a lower commission level) in a shrinking value chain that is providing a better product to the end buyer. Exhibit 4 The Hales Report Contact: Feedback@TheHalesReport.com Page 10

11 Organic Growth Sustained At ~3-4% Into 2017: As public (re)insurance broker earnings season continues, we track the reported organic growth #s thus far (all but Aon have reported). Organic growth trends appear broadly similar to Management teams have noted some signs of rate decline moderation and continued modest benefit from exposure growth (with hopes for more to come) organic feels like it will end up being similar to 2016 or maybe even a little better. A.J. Gallagher CEO Pat Gallagher Exhibit 5 Brokerage Organic Growth Q4:15 Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 A.J. Gallagher 4.3% 3.6% 3.6% 2.8% 4.8% 2.2% 3.4% 3.6% 2.7% Aon 2.0% 3.0% 3.0% 5.0% 3.0% 3.0% 3.0% 3.0% Brown & Brown 2.8% 2.6% 3.0% 2.5% 1.3% 2.6% 4.3% 3.5% 3.5% Marsh&McLennan 3.0% 3.0% 3.0% 4.0% 2.0% 2.0% 2.0% 5.0% 5.0% Willis Towers 3.8% 3.3% -1.3% 4.8% -1.1% -1.2% -1.9% -0.9% 3.9% Composite 2.9% 3.1% 2.4% 4.2% 2.2% 1.7% 2.3% 3.1% 3.7% Hub 4.7% 5.3% 3.1% 4.2% 3.3% 2.7% 1.7% 4.7% BB&T 7.5% 1.4% 0.6% 0.6% 1.9% 0.9% 0.2% -0.8% -1.3% Mid-Market U.S. Brokers: A.J. Gallagher reported +2.7% organic growth, lower than the 3.6% reported in 2016, but with management upbeat about the future prospects. Domestic Retail P&C was a drag, but mgmt. noted 4% growth from Employee Benefits. The company s international operations were also additive to the overall growth rate. Gallagher continues to suggest rate & exposure is having a ~1pt negative impact on organic trends. As noted previously, Brown & Brown delivered Q1 organic growth of +3.5%, better than the 3% growth rate in 2016 (which benefited from claims servicing revenue). Mgmt. highlighted continued economic growth and some moderation in rate declines for certain segments (including catastrophe exposed property). Bank owned BB&T Insurance reported a -1.3% decline in organic revenues attributed to timing of payments in Wholesale. Total insurance revenues increased +9.4%, driven largely by the acquisition of U.S. wholesale broker Swett & Crawford in April of 2016, with wholesale revenues +14.7% and retail +4.3%. The Hales Report Contact: Feedback@TheHalesReport.com Page 11

12 Large Global Brokers: Marsh & McLennan brokerage organic growth was +5%, consistent with Q4 but better than 2016 of +3%. That said, mgmt. signaled this is a high water mark as there is still only a modest level of global economic growth. Within Marsh, both International and Domestic grew +5%. Reinsurance broker Guy Carpenter was +4%. While not separately disclosed, the company continued to cite Marsh Agency as an organic growth leader. New business was exceptional, and that was contributions across international, as well as the U.S. and Canada. We saw strong contributions from the core U.S. brokerage business with strong new business and Marsh Agency continued its very strong performance in terms of driving top-line growth. Marsh Mac April Conf. Call Willis Towers reported 5% organic growth overall, with 3% organic growth in Corporate Risk & Broking and 5% growth in Investment Risk & Reinsurance (the traditional brokerage segments, approximately 4%). Mgmt. noted several one-time items which benefit the growth (much better than the +1% in 2016), including timing. Notably, the company s North America brokerage operations remain in turn-around mode, as management noted slight negative growth against a difficult +4% organic growth comparable in 1Q:16. Aon will report Q1 results on Tuesday, 5/9. The Hales Report Contact: Feedback@TheHalesReport.com Page 12

13 Hales Hits: Press speculation on AIG management succession continues. Bloomberg reports that Marsh & McLennan s Peter Zaffino (Chairman of Risk & Insurance Svcs; CEO of primary broker Marsh) may leave to join AIG if Brian Duperreault returns to AIG as its CEO. Acrisure announced Michael Sherman, former vice chairman of AssuredPartners, as its new president (joined in January as a strategic advisor). Mr. Sherman will continue to apply his vast operations and leadership experience as we further build Acrisure into the preferred provider of insurance solutions, and will assist the company in identifying strategic acquisitions across the globe. Intact, Canada s largest P&C insurer, acquired U.S. Specialty insurer OneBeacon from White Mountains for $1.7B or 166% of book value and a 15% premium to OneBeacon s latest closing price (the sale process had been rumored for a while). Fronting specialist State National added 2 new clients in its Program Services segment with existing books that produce ~$200M of annual premium. While not disclosed, SN noted these programs are written through a program manager of a large national broker & a specialty MGA. Aon completed its benefits admin and HR BPO sale to Blackstone - a bit sooner than the expected mid-year closing. Cash proceeds total ~$3B after-tax, with an additional consideration of $500M based on future performance. Tuck in M&A in specialized growth areas is part of the future strategy. A study by the Ponemon Institute and Aon found that organizations now think their cyber assets are more valuable than property, plant and equipment assets, despite spending four times as much on property related insurance. Aon published its 2017 Global Risk Management Survey, and found that damage to reputation/brand, economic slowdown/slow recovery, and increasing competition were viewed as the top risks based on a survey of 2,000 public and private companies. President Trump signed a memo on 4/21 focusing on reviewing the Systemically Important Financial Institution (SIFI) identification process and temporarily stopping regulators from identifying new non-bank financial intuitions. Currently, only 2 insurance companies are labeled SIFIs AIG and Prudential. Global (re)insurance and specialty wholesale broker ED (previously Cooper Gay) appointed John Plummer as Chairman of Property & Casualty. Plummer previously was at Howden as a managing director for the North American property and casualty division. The Hales Report Contact: Feedback@TheHalesReport.com Page 13

14 For 4 months in a row U.S. new vehicle sales have slowed, with light vehicle sales for the 3 larger automakers dropping 6-7%. For insurers this means lower exposure growth, but if new and used car prices drop it could mean less pressure on loss costs which have been running hot. Willis and CB Insights reported new investments in the insurtech market slowed Q1:17, yet 2015/2016 total funding volume topped $1B as incumbent insurers and other capital providers (e.g. VCs) continue to show strong interest. The data notes the smaller business market s ongoing shift into a digital distribution model could cause the platform to reach one quarter of total small business insurance premium by The Senate penned draft legislation that reauthorizes the National Flood Insurance Program (NFIP) for an additional 10-years (past reauthorizations only extended 5-years). The bill also tries to increase private insurer s participation in the market by requiring reinsurance purchasing, more data sharing and less restrictions on private insurers. Aon s Q4:16 Quarterly D & O Pricing Index shows program renewal pricing down 10.8% Q4:15 and Q4:16, full year rates dipped 8.1%. Liberty Mutual s acquisition of Ironshore from Fosun International is complete. The purchase price was $2.9B, subject to post-closing adjustments. Ryan Specialty Group, LLC hired Kathy Burns as its new Senior VP, Chief Digital Officer. She had been CEO of Ventiv Technology (was Aon esolutions) and plans to stay on the Board. Ms. Burns also worked for Marsh and Crawford & Company. The Hales Report Contact: Feedback@TheHalesReport.com Page 14

15 U.S. Deal Diary Q2 Update & Notable Deals: On 4/19 AmWINS, the #1 wholesale broker in the U.S. with $13B+ of premium placed, announced the acquisition of #9 privately-owned wholesaler Partners Specialty with $500M+ of premiums placed. Recall in 2016, Dragoneer Investment Group increased its investment (to 35%) in AmWINS alongside a 30% investment by Canadian pension manager PSP Investments and 35% ownership by AmWINS employees. While not a traditional roll up, AmWINS has averaged a few acquisitions per year amidst a trend of significant consolidation among wholesale distributors. The company also added Networked Insurance Agents to its AmWINS Access (small commercial) division, adding to standard lines capabilities. On 5/3, A.J. Gallagher announced the acquisition of Texas Insurance Managers. AJG continues its active start to the year with its 15 th announced deal (12 domestic) vs. just 13 over the same period of 2016 (all domestic). Bank acquisitions of insurance brokerages continued in Q2:17, with 2 publically traded banks First Defiance Financial Corp and Bryn Mawr Bank Corporation - entering into agreements to acquire brokers. Exhibits 6, 7 YTD Most Active Acquiring Brokers - Monthly (Domestic Deals) Jan Feb Mar Apr May 17 YTD National Brokers Acrisure, LLC AJG (Public) Hub International Hilb Group, LLC AssuredPartners, Inc USI, Inc World Insurance Associates LL RSC Insurance Brokerage, Inc MMA (Public) Sub-Total Other Total Broker Deals Source: SNL, Factset, and other public sources through YTD U.S. Middle Market Agency Transactions By Quarter / Year Q1 Q2 Q3 Q Q1:17 Source: SNL, Factset, other public sources through YTD The Hales Report Contact: Feedback@TheHalesReport.com Page 15

16 Exhibit 8 Second Quarter U.S. Middle Market Brokerage M&A Acquiree Date Acquirer Acquiree State 1-Apr Heffernan Insurance Brokers National Truck Services Group AZ 1-Apr Hilb Group, LLC Group Benefits Division NC 1-Apr Hilb Group, LLC Keough Kirby Associates, Inc. RI 1-Apr World Insurance Associates LLC Mark Lauria Associates, Inc. NY 3-Apr China Minsheng Investment Group Corp, Ltd. ArmadaCorp Capital, LLC MD 3-Apr Hub International Heritage Corporate Benefits, LLC GA 3-Apr Maximum Independent Brokerage, Inc. Starpoint General Agency, Inc. PA 3-Apr Prime Risk Partners, Inc. Gundermann & Gundermann, Inc. NY 4-Apr Truitt Insurance & Bonding, Inc. Beacon Insurance Group, Inc. AL 5-Apr KKR & Co. L.P. SES Insurance Brokerage Services, Inc. CA 10-Apr RSC Insurance Brokerage, Inc. Mosse & Mosse Insurance Associates LLC MA 13-Apr First Defiance Financial Corp. Corporate One Benefits Agency, Inc. OH 15-Apr Nancy Z. Bender Insurance Agency Inc. H.R. Hatch Insurance Agency,Inc MA 17-Apr Sterling Risk Advisors, Inc. Seacrest Partners, Inc. GA 18-Apr Platform Partners, LLC Beneplace, LLC TX 18-Apr RSC Insurance Brokerage, Inc. Friedman & Friedman Agency, Inc. NY 19-Apr AmWINS Group, Inc. Partners Specialty Group, LLC PA 19-Apr Bryn Mawr Bank Corporation Hirshorn Boothby PA 19-Apr Hausmann-Johnson Insurance, Inc. Benefit Services Group, Inc WI 19-Apr M&M Insurance Associates, Inc. Richey Health Benefits LLC KS 20-Apr VAST City Insurance Agency MI 26-Apr Arthur J. Gallagher & Co. Commercial Insurance Brokers, LLC OK 26-Apr Workers' Credit Union Braley Wellington Insurance Group MA 30-Apr Acrisure, LLC Undisclosed Insurance agency CA 30-Apr Acrisure, LLC Undisclosed Insurance Agency MI 30-Apr Higginbotham Painter & Johnson Financial LP TX 30-Apr World Insurance Associates LLC Wm. G. Palermo, Inc. NJ 1-May AmWINS Group, Inc. Networked Insurance Agents,LLC CA 1-May Hub International City Ins Svcs/Silver City Ins/J&C Finl CA 2-May Hub International Rossmann-Hurt-Hoffman, Inc. MD 2-May KKR & Co. L.P. Summit Insurance Resource Group ID 3-May Arthur J. Gallagher & Co. Texas Insurance Managers, Inc. TX 3-May Hub International Scarborough Company Insurance, Inc. FL 3-May Insurance Services United Inc. Lewis Casualty PA 4-May Acentria Insurance L&S Insurance and Financial Services, Inc FL 5-May Kaplansky Insurance Agency, Inc. Brooklawn Insurance Agency, Inc. MA Source: SNL, Factset, other public sources; Note: Purchase price where available, does not include deals where target was not disclosed Purchase Price ($, M) Exhibit 9 The Hales Report Contact: Feedback@TheHalesReport.com Page 16

17 5/11 8/11 11/11 2/12 5/12 8/12 11/12 2/13 5/13 8/13 11/13 2/14 5/14 8/14 11/14 2/15 5/15 8/15 11/15 2/16 5/16 8/16 11/16 2/17 5/17 Current Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12 Q4-11 Q3-11 Q2-11 Q1-11 Q4-10 Q3-10 Q2-10 Q /31/15 1/31/16 2/29/16 3/31/16 4/30/16 5/31/16 6/30/16 7/31/16 8/31/16 9/30/16 10/31/16 11/30/16 12/31/16 1/31/17 2/28/17 3/31/17 4/30/17 Public Broker Valuations: Exhibits 10, 11, % 20.0% 10.0% 0.0% Broker Price Performance vs. S&P 500 (Since YE'15) 29.9% 17.4% -10.0% -20.0% S&P 500 (17.4%) Broker Composite (29.9%) Source: Factset Public Broker EV/EBITDA - 5 Year 12.0 Brokers Middle Market Brokers 12.2x x Source: Company Reports, Factset 20.0 Public Broker P/E vs. S&P Year Brokers S&P x x Source: Company Reports, Factset Dowling Hales has developed a consistent reputation as the advisor of choice dedicated exclusively to the insurance sector. We rank among the top insurance advisors, having advised on over 187 completed transactions representing over $8 billion in aggregate value since In 2016, Dowling Hales was acquired by Vanbridge LLC, expanding our advisory services in the insurance sector for our clients and partners. The Hales Report Contact: Feedback@TheHalesReport.com Page 17

18 Important Disclosures This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This report is not an offer to buy or sell any security or to participate in any investment. The firm has no obligation to tell you when the opinions or information in this report change. The information and statistics contained herein are based upon sources which we believe to be reliable, but have not been independently verified by us. The firm makes every effort to use reliable comprehensive information, but makes no representation that it is accurate or complete. The firm may, at any time, hold a position in the public shares or private equity of any companies discussed in this report. The Hales Report Contact: Feedback@TheHalesReport.com Page 18