Insurance M&A in the UK - has broker activity peaked?

Insurance M&A in Europe has reached new heights this year, pushed by booming activity in the broking subsector, increasing private equity dealmaking and add-on and bolt-on acquisitions made by consolidation platforms.

Like several other highly-fragmented UK industries (most notably wealth management), the insurance industry seems to present the perfect environment for widespread consolidation. According to the British Insurance Brokers Association, there are around 1,800 brokers in the UK at present, though our research indicates the actual number has dropped to between 1600 to 1700.

Many of these businesses are small, have ageing owners and are facing both a tough regulatory environment and growing customer expectations. Given these conditions, it's no wonder that private equity backed consolidators have taken such an active interest in the market and that cash-rich US firms are looking at the UK as a springboard to establish themselves in Europe.

But has this activity peaked? An increasing number of industry watchers feel like M&A activity may have reached a hiatus, with the remainder of 2023 and 2024 potentially posing a stern test to ongoing rapid consolidation in the UK insurance industry.

Insurance M&A - How things stand in 2023 so far

According to FTI Consulting’s recent European Insurance M&A Barometer Report H1 2023, dealmaking in the European insurance industry has defied rising interest rates – which have impacted M&A in many other sectors – to reach record volumes during the first half of this year.

Despite the UK facing severe economic headwinds over the past couple of years, it has led the way for European insurance market M&A and reflects many of the same trends: strong private equity activity and a focus on acquisitions involving brokers and service providers.

However, the dominance of broker M&A has led to forecasts that activity in this area may have already peaked amid such rapid and widespread consolidation and that future periods could see a drop in dealmaking in the wider insurance sector as a result – particularly if macroeconomic conditions begin to take more of an effect on appetite among dealmakers.

Despite this, several other factors point to the possibility that dealmaking within other subsectors of the insurance industry could pick up, meaning that, as we enter the fourth quarter of 2023 and begin looking towards M&A trends for 2024, the insurance industry is definitely one to keep an eye on.

Insurance M&A on the rise in Europe and the UK – But has dealmaking peaked?

2022 was a busy year for M&A in the European insurance industry – continuing a trend for consolidation that began in earnest prior to the COVID-19 pandemic in 2020. Across all of Europe, FTI tracked a total of 435 insurance industry deals – compared to 379 during 2021 and 285 during 2020.

At the outset of 2023, there was a feeling within the industry that, in the face of such intense macroeconomic headwinds, this level of dealmaking could not be sustained and that 2023 might be a year of slowing activity.

However, dealmaking continued on its sharp upward trajectory during the first half of the year, with 267 deals recorded across Europe in H1 2023, compared to 219 during the same period of 2022. As with 2022’s growth in activity, the majority of this dealmaking was within the brokers and service providers subsector, Again, outperforming concerns that emerged at the end of 2022, broking firms continued to attract high sale multiples.

Private equity also played a key role in this growth during the first half of the year, with private equity activity increasing by 35 per cent from 121 transactions during H1 2022 to 164 this year. Reflecting a trend seen in many sectors with strong private equity involvement, this was dominated by activity by private equity portfolio companies, which accounted for 144 transactions, compared to just 20 direct acquisitions by private equity firms.



The strength of dealmaking was by no means wholly attributable to private equity, however, as strategic buyers operating with no private equity backing also increased their activity during the first half of the year, with 103 announced transactions compared to 98 in the same period last year.

As per 2022, the most active M&A market in Europe for insurance has been the UK and Ireland, which saw 112 deals during the first half of the year, compared to 105 a year earlier. Reflecting broader European trends, the majority of these deals (101) involved brokers and service providers.

Meanwhile, private equity activity in the UK was also strong, with 71 transactions during the first half of the year, compared to 56 last year. Activity by strategic buyers, however, was one area in which dealmaking declined, with 41 transactions during the first half of 2023, down from 49 a year earlier (although this remained significantly above the figures of 13 and 19 seen during H1 2020 and H1 2021, respectively).

While these are undoubtedly extremely strong figures across both the UK and Europe, and demonstrate a sector that has gone from strength to strength in terms of dealmaking despite mounting adverse economic factors, there are concerns that such busy activity may not sustain much longer.

There remains the possibility that economic headwinds such as inflation and rising interest rates could come to bear on activity, as has been seen across many sectors. However, as FTI notes in their report, perhaps the biggest indicator that dealmaking may begin to slow is the growing scarcity of targets in the broker subsector. Brokers dominated M&A in both the UK and across Europe during the first half of the year (as in 2022), so if dealmaking in this area begins to dry up then the sector’s overall figures would decline drastically.

Why the shift to broker deals?

In a recent report, Bain & Company highlighted the attraction of brokers to buyers in the M&A space and how they have come to dominate insurance M&A over recent years: “Integration and value realisation is never easy, but on balance, brokerage acquisitions tend to deliver more of a known entity (contracts, clients, sales teams) than carrier deals, which can include a complicated mix of legacy blocks, ageing technology, and systems and processes that may or may not be a good fit with the acquiring company.”

In other words, while the variety of adverse economic and geopolitical conditions being seen around the world right now may not have impacted dealmaking volume within the insurance industry (which has gone from strength to strength), such concerns may be highlighted by the shift away from deals for insurance carriers, towards relatively safer deals for brokers.

Of course, risk aversion is not the only reason why brokers have come to be the main M&A target in the insurance market. An important factor cited by Deloitte in their mid-year 2023 insurance report looking at M&A in the US market also cited the strong economics offered by brokers, but also stated that their specialisations were helping to attract strategic buyers and leading to stronger sale multiples in the sector.

Such considerations are likely prominent in the minds of acquirers in the UK market, as they seek acquisitions that can deliver both strong financials and specialisations that accord with their strategic aims and growth plans.
Crucially, such UK acquirers are not short of potential acquisition targets, either. The UK broker market is one of the biggest in Europe and the world and, despite strong dealmaking figures over the past few years, remains significantly fragmented – with many firms being small businesses and an ageing population of owners (much like the wealth management and financial advice industry which has experienced such intense M&A activity over recent years).

Is broker activity poised to drop?

Consolidation widespread, but fragmentation remains high
Despite these trends, it is clear that certain industry watchers feel that the busy dealmaking seen in the broker segment may have passed its peak and that opportunities for consolidation may begin to dry up over coming periods.

It is worth noting that FTI raised similar concerns regarding a possible scarcity of broker acquisition targets towards the end of 2022, prior to M&A activity involving brokers growing to even greater heights during H1 2023 – spurred on by strong demand, both among private equity-backed consolidation platforms and non PE-backed strategic buyers.

Furthermore, there are numerous indications that, while there may not be a bottomless well of deals to be done, there is still significant scope for busy M&A activity involving insurance brokers to continue for some time yet.

Speaking in October 2023, Peter Blanc of Howden Group said that ongoing consolidation in the broker sector was inevitable as a result of how highly fragmented it remains. According to Blanc, of the 1600 to 1,800 brokerages in the UK, only around 700 of these firms have more than 10 staff.

As has been demonstrated in the wealth management industry (which is significantly more fragmented than even the insurance sector), the fact that so many companies are so small (with many IFAs) having employee headcounts in the low single figures, means they become more viable acquisition targets as factors such as intensified regulation and compliance, new technological uptake and growing customer expectations become more pressing.

When discussing fragmentation in the broker sector and the ongoing scope for consolidation, one can look at The Clear Group as an exemplar. The group was first established in 2001 and since then has completed around 50 acquisitions.

With backing from Goldman Sachs, the firm has ramped up its acquisitive activity this year, completing 10 acquisitions in 2023 so far. The Clear Group’s acquisition strategy is aimed at adding complementary businesses that simultaneously strengthen its existing services, expand its offering (for example, its recent acquisition of Thomond Underwriting – the group’s first MGA deal) and enable it to expand its geographic presence.

Starting out in London, the company has used acquisitions to expand into Sussex, Kent, the Midlands, Yorkshire and, lately, into Ireland. Following its most recent acquisition, which saw the group take on South West-based brokerage Bluestone Insurance Services, Clear Group CEO Mike Edgeley reaffirmed the company’s commitment to acquiring more brokers across the UK.

Discussing the company’s M&A strategy with Insurance Times in the wake of the Bluestone deal (the group’s third acquisition of September 2023), Clear Group Executive Chairman Howard Lickens said that the group was “deliberately fussy” and that it regularly opted against acquiring good businesses that didn’t fit its model.

Lickens said that the group seeks to assess synergy with target businesses, considers all stakeholders, not simply Clear Group shareholders and assesses the suitability of a company’s existing management team prior to making an acquisition.

Despite some forecasts elsewhere that broker consolidation might be poised to dry up, Lickens said that Clear Group is aiming to ramp up its M&A activity, saying that 2023 has been the company’s most acquisitive year “by far” and that he expects this to accelerate.

As well as expanding into Ireland with two recent acquisitions, Lickens says the group is now actively looking at spreading to Europe and is targeting mainland European businesses that might fit its business model.

Ageing owners could drive exits
Another parallel with the wealth management sector is that many owners at brokerage firms are ageing and approaching retirement, with Peter Blanc stating that the average age of principals at UK brokerages is in the late 50s.

As has been seen in many other sectors, demonstrated by the increase in exit deals such as MBOs and EOTs, owners seem to be increasingly mindful of succession planning in the wake of the COVID-19 pandemic and the subsequent economic downturns.

Blanc stated: “So inevitably, people are thinking about retirement and succession planning. And of course, there are loads of other challenges for smaller brokers to face including regulation, compliance, and actually simply just the challenge of growing.”

Speaking to Insurance Business Magazine, Phil Bayles, Chief Commercial Officer of Ardonagh Advisory, brought up a factor that has long been cited as a factor in exit strategies in many industries (particularly wealth management): the prospect of Capital Gains Tax (CGT) increases.

While CGT concerns are perhaps less acute than they were two or three years ago, when many felt that changes to CGT were imminent, it does remain something of a looming threat and could still prompt some owners (who may not otherwise have been considering selling) to seek an exit while rates remain favourable.

Bayles points out that concerns over CGT could begin to grow again during the remainder of 2023 and into 2024. “We thought it (M&A activity) might drop off a little bit, but I think the prospect of a general election next year will keep the market quite lively [during] the back end of this year and into next year. I think threats around Capital Gains Tax changes will lead some people to think and wonder whether now is the right time to go.”

Bayles, who feels that M&A in the sector is “inevitable”, says that every owner who builds a business “needs an exit strategy” and that, as owners enter their late 50s and early 60s, this is the time they begin looking to the future and hand over their business to new ownership. “We won’t run out of brokers”, Bayles concludes, “they’ll keep renewing themselves.”

JMG Group is a Yorkshire-based insurance group that was established in 2020. Since then, the group has undergone rapid acquisitive expansion, acquiring more than 20 insurance brokers, including 10 deals this year.

The company was formed through the SYNOVA-backed MBO of JM Glendinning Insurance Brokers and it has grown to have a network of over 25 offices and more than 450 staff across the UK. The company targets acquisitions of businesses with similar cultures and expertise.

Once companies have been acquired, they typically continue trading under their existing brand, meaning minimal disruption to customer service, while certain back-office functions are centralised with JMG. This gives the group a particularly attractive proposition to owners at small brokerages, who are facing growing regulation and evolving customer expectations.

The group’s most recent acquisition was Blackfriars Group, a liability and business insurance provider for UK SMEs. Outlining the benefits of joining JMG, Blackfriars Group director Steven Lewis said that centralising administration such as compliance and business management would free up time to focus on clients and support the team in further developing their roles.

JMG recently demonstrated its dedication to acquisitive growth with the appointment of Tanish Cheema to the newly created role of Group Integration Co-Ordinator. In this role, Cheema will support the group’s senior acquisition team with the integration of new businesses.

Private equity backing could facilitate M&A growth
Blanc also points out that, in such a tough economic environment, it is very difficult for businesses to attain growth. Organic growth during times of economic uncertainty is notoriously difficult, with M&A being one of the only reliable routes to growth.

For smaller brokerages, such acquisitive growth plans may not be possible, but it may be viable for larger firms to grow through consolidation of these smaller operators – particularly if they are able to attract private equity backing.

Private equity activity, as previously mentioned, saw significant growth during the first half of 2023 in both the UK and Europe more broadly and, with fragmentation remaining high, companies seeking to grow in the current environment may be eager to attract this financing to fund buy and build acquisition strategies.

As FTI note in their report: “Private equity (PE) investors have long been attracted to the low capital requirements and scalability of insurance distribution and services businesses. H1 2023 saw an increase of 35% in PE activity – direct and through portfolio companies – with 164 announced transactions compared to 121 in H1 2022. For broker consolidation platforms, add-ons and bolt-ons have been the dominant path to value creation.”

Smaller businesses, meanwhile, may see being acquired as one of the best ways to build resilience and – if they become part of a bigger group (backed by private equity funding) but retain their independence – could potentially be used as a platform to build growth. As Blanc states: “It’s really difficult to grow a small insurance broker if you can’t afford to make acquisitions, and taking on talent is a very expensive and sometimes pretty risky proposition.”

US buyers take a keen interest in the UK market
Another indicator that broker M&A may not yet be due for a significant decline in the UK is the potential that interest in the UK broker market among US buyers may be poised to increase. According to John Wepler, CEO of M&A at advisory firm MarshBerry, many US brokers view the UK as “the most logical launching point” for international expansion.

Wepler, speaking after MarshBerry acquired UK insurance broker iMas, said that the acquisition “fills a geographic hole” that built on the company’s existing EU presence in the Netherlands, France and Germany and added that there could be a considerable number of US insurance brokers looking at similar expansion following years of growth.

Speaking to Insurance Times, Wepler said: “There are roughly 20 insurance distributors in the US that are over $1bn in revenue, the majority of which do not have a presence in Europe. That is generally the threshold when a US broker starts to look for an international presence and the UK is often the most logical launching point. “Many without a UK presence are rolling out plans to establish a European beachhead in London, as it is the Wall Street of insurance.”

Aside from the obvious attraction that the UK continues to offer a strong and highly fragmented broker market, a familiar factor may contribute to growing US interest in UK brokers: the strength of the dollar against the pound. While the pound has regained considerable strength since the dark days of Liz Truss and Kwasi Kwarteng’s mini-budget fiasco in Autumn 2022, US buyers still have considerable opportunities to acquire UK companies at a premium.

Another recent example of a US firm entering the UK is Brown and Brown’s acquisition of Global Risk Partners in July 2022. The firm was subsequently rebranded as Brown and Brown Europe, potentially reflecting Wepler’s observation that US firms could view the UK as a springboard into the wider European broker market.

Speaking to Insurance Times, Brown and Brown Europe’s Head of M&A Stephen Ross pointed out that there were already several US-headed businesses making acquisitions within the UK market and added that this may provide incentive for other US companies to enter the UK over the coming months.


Since its acquisition by Brown & Brown, Brown & Brown Europe (formerly Global Risk Partners) has completed more than 10 acquisitions as it continues to take advantage of ongoing fragmentation in the UK broker market.

The firm’s most recent acquisition (its first since the rebrand) saw it acquire Berkeley Insurance Group, one of the UK’s largest brokers, which is headquartered in Leicester and has offices in London, Edinburgh and Birmingham.

As well as growing Brown & Brown Europe’s geographic presence in the UK, the deal significantly boosts its mid-market customer offering, with Berkeley renowned for its capabilities in cyber, financial risks, construction, private client, corporate client and commercial property insurance.

As for its US-based parent, its UK activity is by no means limited to the newly rebranded company. Brown & Brown also recently announced the acquisition of MGA group Kentro Capital and its subsidiaries.

Kentro Capital, which manages over £500 million of gross written premium across the UK, US, Europe, Asia and Dubai, gives Brown & Brown yet another springboard for growth, both in the UK and further afield.

What about insurance carrier M&A?

Although M&A involving brokerages may not be poised to plummet immediately, there is no doubt that it has come to dominate dealmaking in the insurance sector, both in the UK and internationally, and that if activity does begin to decline, insurance M&A will be impacted accordingly.

For that reason, it’s important to assess the reasons why M&A activity involving insurance carriers has become so much less common than M&A involving brokers. Fundamentally, there appears to be one very clear reason why broker M&A is so much busier than carrier M&A: there are far more brokers than there are carriers.

According to Statista figures from 2022, there are approximately just over 400 insurance carriers operating in the UK (compared to c.1700 broker firms). Clearly, the significantly higher level of fragmentation among brokers leaves far more space for consolidation than in the carrier market.

Another key figure from Statista is that, between January 2014 and September 2022, the overall number of insurance companies operating in the UK fell by around 150. This suggests that, over the previous decade, there was a considerable degree of consolidation within the carrier sector, resulting in a reduced scope for deals in the current market.

There’s no getting around the fact that M&A in the insurance carrier market has been slow. While there were 101 deals involving UK and Ireland brokers and service providers during H1 2023, there were just 11 involving insurance carriers (although this still positioned the UK as the most active M&A market for insurance carriers in Europe during the first half of the year).

Given this slow activity and the comparative lack of insurance carriers in the UK, it is highly unlikely that any increase in carrier M&A would pick up the slack from a major drop-off in activity involving insurance brokers – but are there any signs that carrier dealmaking could be poised to increase?

In order to find any evidence that carrier M&A could be set to grow over the medium term, it might be better to look at insurance M&A trends on a global scale. According to a 2023 report by Clyde & Co, completed insurance carrier M&A was down 17 per cent worldwide during the first half of 2023 (reflecting the kind of trend seen in the UK and Europe so far this year), with 171 completed carrier transactions.

Clyde & Co attributed the global drop in carrier M&A to an array of factors, including a tightening regulatory environment and diminishing appetite for insurance tech (insurtech) businesses, but also notes that both technology and regulatory changes could ultimately drive future M&A and outlines some reasons for optimism that activity might increase.

With regards to insurtech, Clyde & Co say that rising inflation and interest rates has meant that insurtech businesses in Europe have struggled to attract investment, contributing to a drop in appetite for M&A activity. However, in other regions, such as Asia and Latin America, ongoing tech innovations have continued to drive interest, including from private equity buyers.

With interest rates now stabilising somewhat in the UK and the economy potentially poised to enter a less volatile period, this could lead to a resurgence of interest in insurtech startups and, following on from this, growing activity among carriers that are able to leverage their innovations.

Clyde & Co partner Joyce Chang cites AI as being one of the likeliest drivers of investment, asserting that “as the use of AI in insurance becomes better established, investment is likely to return to insurtech in other regions – as the sector best-placed to leverage the emerging technology.”

In terms of the impact of regulation, while this has perhaps stunted dealmaking in the global insurance industry, changes in the UK are seen as potentially being conducive to greater activity. Following a review of the Solvency II framework that was announced in 2020 following Brexit, widespread changes have been announced to the legislation.

In June 2023, the UK government introduced draft statutory instruments as part of a review that mandates the Prudential Regulation Authority (PRA) to make significant changes in the insurance industry. These changes include reducing the "risk margin" requirements for insurers, specifically by approximately 65 per cent for long-term life insurance and 30 per cent for non-life insurance. The PRA will also modify the method for calculating this risk margin by adopting a cost-of-capital approach.

Additionally, the government is relaxing rules related to the "matching adjustment" (MA), which provides capital benefits to insurers with assets that match the cash flows of long-term insurance liabilities. This involves adopting a more sensitive "fundamental spread" to measure credit risk and making MA eligibility criteria for assets and liabilities more flexible. The PRA will also adopt a more proportionate approach to handling MA breaches, moving away from the current strict consequences for such breaches. There are also changes which will aim to encourage the creation of more new insurance start-ups.

In a report on the potential impact of these rules on insurance M&A, Latham & Watkins says that some of the changes could deliver “greater flexibility for insurance groups in acquisition mode”, writing: “Despite showing initial conservatism when engaging with the government’s proposed changes to the Solvency II regime, the PRA is now working towards delivering the benefits to the UK market which the government is seeking as part of its drive towards greater competition and investment in the UK insurance market. Acquiring insurance businesses subject to “Solvency UK” will still require detailed diligence, but the reduction in complexity and overheads now proposed by the PRA, together with some welcome flexibilities which apply in an M&A context, will hopefully encourage further consolidation in the UK insurance sector.”

According to Clyde & Co partner Eva-Maria Barbosa, there are also economic reasons that might drive an increase in carrier M&A, particularly due to the tough financing conditions that many would-be buyers face in the current environment. While many broker consolidators rely on private equity investment to fund their acquisition strategies, Barbosa points out that carriers may not need to compete for external sources of funding and may be well-placed to make acquisitions utilising their existing resources.

She states: “The lull in insurer M&A will be short-lived. Despite ongoing geopolitical and economic uncertainty, insurance businesses are adopting a ‘Keep Calm and Carry On’ approach. Carriers are less dependent on bank financing for strategic transactions as they are restricted to leveraging a smaller proportion of the transaction anyway. With insurers typically balance sheet-heavy at present, the break in carrier M&A activity is likely to be over.”


Clearly, the UK insurance carrier market is already significantly more consolidated than the broker segment and is therefore unlikely to see a huge wave of dealmaking. As a result, if FTI’s prediction that broker M&A has peaked proves to be correct, then the broader insurance market would be poised for a considerable decrease in activity.

However, there are several solid indications that broker M&A still has many major tailwinds that could continue to propel it, while the possibility that insurance carrier M&A could be set for some form of rebound means, overall, the insurance M&A market remains well placed to see strong ongoing activity.

Also read: UK Insurance M&A defies EMEA slowdown (March 2024)

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